related - First punch in Equatorial Guinea fight
Equatorial Guinea's Ministry of Mines, Industry&Energy (MMIE) has won the first round of a heavyweight political contest with state oil company GePetrol after selecting Ophir Energy as the winning bidder for deep-water Block R to the west of Bioko Island, writes Iain Esau.
Atanasio-Ela Ntugu Nsa, who heads up the ministry and whose right-hand man is Gabriel Mbega Lima, the son of President Teodoro Obiang Nguema Mbasogo, is likely to see its selection of Ophir as a partial victory over Candido Nsue Okomo, GePetrol's head and the brother-in-law of the president.
Ntugu Nsa is said to have been put out by Gepetrol's signing, earlier this year, of a PSC with UK-based Energy Equity Resources (EER) covering the same block but without the authority of the ministry.
However, as one source suggested, Nsue Okomo could yet stage a fight back as Ophir, 50%-owned by South Africa's Mvelaphanda Holdings, has only been invited to sign a memorandum of understanding after which talks involving the MMIE, the Ministry of Finance and Gepetrol will start on a PSC.
This may, suggested one commentator, leave scope for EER to perhaps take a smaller stake in Block R.
Ophir's selection was based on a huge $75 million signature bonus, a commitment to drill three exploration wells during the initial exploration period and a 20% carried interest for Gepetrol.
One market source was "amazed" at the size of the signature bonus as well as the drilling commitment, given that traditional Equatoguinean PSCs have an initial three-year period followed by a two-year extension.
Other outfits invited to bid for Block R included Anadarko, Nexen, Repsol YPF, Kosmos Energy, Malaysian outfit Pexco Exploration as well as EER.
Block R lies south and east of ExxonMobil's Block C, west of Atlas' Block J, next to Chevron's undrilled OPL 247 in Nigeria and partly borders ONGC/Equator's Block 2 in the Nigeria/Sao Tome JDZ.
