*Barry Morgan* ERHC Update on Upstream
Devon exits from African venture
Devon Energy has pulled out of a consortium linking Pioneer Natural Resources and US minnow ERHC Energy, walking away from substantial equity interests in the Gulf of Guinea that it considered too small to pursue.
The affected deep-water blocks lie in the Joint Development Zone administered by Nigeria and Sao Tome&Principe.
The Joint Development Authority's executive chairman Carlos Gomes said Devon's decision will not affect the timetable for pushing ahead with last month's licence allocations to production-sharing contracts and that agreement had been reached for Pioneer to take up the slack.
It is understood that both Pioneer and ERHC executives visited the Nigerian capital Abuja last week immediately following Devon's decision to decline its equity share of bid awards for Block-2 (65%) and Block-3 (25%).
Devon was designated as operator for Block-2 but Pioneer will now take that role and pick up Devon's share of the signature bonus.
It is also understood that Pioneer has eased up on earlier reservations about taking on too much equity in either of these prospective blocks and is happy with the lion's share, even though ERHC is being carried on the signature bonus.
Several international companies have expressed dismay at the level and extent of participation awarded to indigenous Nigerian companies in key JDAlicences.
While Block-2 includes a 15% stake for Equator Exploration in partnership with ONGC-Videsh, another 10% went to A&Hatman Resources, 10% to Foby Engineering and 5% to Momo Petroleum.
In Block-3, operator Anadarko and the Devon-ERHC tie-up were joined by Pioneer and Equinox Oil&Gas, which were each awarded 10%.
ERHC president Ali Memon, acknowledged the loss for the consortium but insisted that all remaining members have "confidence in the technical and financial capability of Pioneer Natural Resources to successfully carry on with the work programme."
He said: "I understand Devon's position. They have their own targets and objectives and they just felt the percentage was insufficient, especially for Block-3.
"We had a good working relationship with Devon and were pleased to have them with us."
