ERHC Energy Inc (ERHE)

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Here's the referenced article from May:


Sao Tome runs into more problems in JDZ
(Copyright © 2005 Energy Intelligence Group, Inc.)
Friday, May 13, 2005
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Nigeria and Sao Tome and Principe ran into more problems in their Joint Development Zone (JDZ) this week, when Sao Tome regulators criticized the way the latest licensing round was handled. The move could force President Fradique de Menezes to reject awards recommended by the zone's administrator, the Joint Development Authority (JDA). Both De Menezes and Nigeria's President Olusegun Obasanjo have to approve the awards.

In a controversial report, Sao Tome's National Petroleum Agency said the JDA did insufficient checking into bidders' backgrounds. The JDA relied on due diligence done during the first licensing round in 2003 on the grounds similar companies bid, but that meant some second-round bidders went unchecked, sources say. The report also says too many awards to inexperienced Nigerian independents could frustrate operators.

The process has been subject to tension for months, as Nigerian power brokers applied relentless pressure on Sao Tome officials to award coveted Block 4 to US Noble, a partner of ERHC Energy, run by influential Nigerian Emeka Offor, and to relegate US independent Anadarko to Block 3. Most Sao Tome officials appear to favor Anadarko, which offered $90 million for Block 4 to Noble's $57 million. Anadarko put in the second highest Block 3 bid at $40 million. Mike Adenuga, another influential Nigerian, bid highest for Blocks 2 and 4 through various companies.

Influential Sao Tomeans are piqued at the prevalence on the list of proposed winners of well-connected Nigerian independents who seem unlikely to bring much to the party. They include Momo Petroleum and Equinox Oil and Gas, which are thought to be controlled by Mohamed Asebelua -- a power broker once linked to trader Arcadia. Others are Hatman and Godsonic, which have been linked to political strongman Tony Anineh, a close adviser to Obasanjo.

Nigerians are cashing in already, with funds from the first bonuses paid by Chevron and Exxon Mobil for Block 1 deposited in Island Bank, an affiliate of Nigeria's Hallmark Bank (EC Apr.15,p9). The latter is controlled by the family of Nigeria's recently fired Senate president, Adolphus Wabara. The deposit flouts JDA rules, which call for cash to be paid into triple A-rated banks, Sao Tomeans say.

De Menezes has clearly been subject to pressure from Nigerians, too, and a key question is whether he'll reject the awards or toe the Nigerian line. The report could enable his opponents to force the presidential hand. De Menezes is thought to be concerned that former presidential oil adviser Patrice Trovoada, whose family has political influence in Sao Tome, could make common cause with opposition parties in parliament