Obiora: Our Role in Sao Tome
This Day (Lagos)
Posted to the web November 16, 2005
Lagos
Onyebuchi Ezigbo spoke with the Executive Director Inspection and Monitoring Engr. Samuel Obiora on Resource Development strategy of the Nigeria/Sao Tome and Principe Joint Development Zone (JDZ) in Abuja
What is JDZ all about?
The Nigeria/Sao Tome and Principe Joint Development Zone (JDZ), defined by formal bilateral Treaty, is an area of overlapping maritime boundary claims that is being jointly developed to the benefit of the two countries. The JDZ lies between Latitudes 1 and 3 degrees north and longitudes 4 and 8 degrees east in the Gulf of Guinea. It covers an area of 34,548 km2 with water depths ranging from about 1500m in the northern part of the JDZ to over 4000m at its South-Western sector.
Joint Development is not unique to Nigeria and Sao Tome & Principe. Several Joint Zones are found in other parts of the world. An example is the Australia Indonesia Joint Development Zone in the Timor Gap. Joint Development Zones derive their legal basis from International law, the law of treaties and specifically the United Nations Convention on Law of the Sea, UNCLOS.
The Nigeria/Sao Tome & Principe Joint Development Zone is an emerging offshore horn of plenty that will add to the proven West African frontier potential.
The Atlantic margin location of the Nigeria/Sao Tome and Principe Joint Development Zone is strategically significant to the world in terms of future petroleum supply alternatives to the Middle East. Gulf of Guinea is without doubt, one of the most prolific oil and gas provinces in the world. In this respect, the JDZ with its central location in the Gulf of Guinea offers an excellent opportunity for investors in the oil and gas industry. Indeed, one of the major discoveries in the Deep offshore of the Niger Delta, the Akpo Field in Nigeria, is situated about 20 kilometres from the northern tip of the JDZ. Indications from the interpretation of regional seismic surveys point to the extension of the Niger Delta Development Zone. It has highly prospective acreage that is within the reaches of today's technology.
Within Niger Delta, there are also Nigeria's Bonga and Agbami deep offshore discoveries amongst others. In Equatorial Guinea, we have the Zafiro, Alba and Ceiba discoveries. So also are there Kizomba, Girassol and Dalia in Angola to the South.
How is Joint Development Authority (JDA) Grappling with the Exploitation of Oil and Gas Resources in the Zone?
The countries of the region have been able to attract investors to their respective oil and gas industries through the establishment of good working partnership and putting in place, safe political environment and appropriate fiscal terms. Such will be the guiding attraction of would-be investors to the JDZ. Already, the Nigeria/Sao Tome & Principe JDA has awarded ChevronTexaco the right to conduct exploration activities in deepwater JDZ Block 1. The fiscal terms negotiated as part of the PSC for JDZ Block 1 will form the basis for future PSC terms in the JDZ.
Over the course of the past few years, West Africa/Gulf of Guinea has experienced a dramatic change in terms of its standing in the offshore world. The region has progressed from an exploration hot spot where deepwater discoveries were being made in seemingly monthly basis, to the centre of development activity. This is even usurping the Gulf of Mexico in terms of billions of dollars pledged in relation to the number of projects. A large increase in capital investment is expected over the next four years.
As fields in the Gulf of Guinea and offshore Angola move into production, new explorations will be taking off in areas such as the Nigeria/Sao Tome & Principe JDZ.
Can you throw more insight on findings so far as regards oil and gas potentials in the zone?
The Gulf of Guinea currently holds about 10 percent of the world's known oil reserves and is largely unexplored.
The Nigeria/Sao Tome JDZ is a truly frontier region with a fairly understood oil and gas province. Developments in technology and geological understanding of the region would combine to significantly increase success rates. Approximately 30 leads and prospects, essentially structural in nature have currently been identified in the JDZ. Seismic sections show excellent reflection amplitudes with several prospects presenting stacked objectives. Flat spots indicative of fluid contacts have been identified on several of the prospects. This translates into considerable reduced risks on the part of the investors. It is in this light that royalties are part of the PSC. These royalties are however conceived on a sliding scale, ranging from zero to five percent.
Explain the process adopted in awarding oil bloc ?
The first process of acreage allocation in the Nigeria/Sao Tome and Principe JDZ began on August 23, 2003. That opened the 2003 NDZ Licensing Round for nine (9) blocks (Blocks 1 to 9). At the expiration of the deadline, 33 bids were received from 20 oil firms: both multinationals and indigenous companies. Block 1 with surface area of 704 sq. km. Was subsequently awarded to ChevronTexaco as the operator with 51% interest and Esso Exploration and Production Niger-Sao Tome (One) Limited ("ESSO") and Dangote Equity Energy Resources ("DEER") with participating interests of 40% and 9% respectively. Other Blocks were not awarded in that round due to lack of technical and commercial competence on the part of the companies.
Relevant Links
Central Africa
West Africa
Sustainable Development
Nigeria
São Tomé and Príncipe
Petroleum
Thereafter, Blocks 2 to 6 were offered for bids in the 2004 JDZ Licensing Round. The fiver blocks form part of the blocks that were not awarded in the 2003 Licensing Round and would be awarded soon. Block 1 to 6 have total surface area of 4,568 sq.km., hence 13.2% of JDZ. Consequently, award of blocks 1 to 6 would leave 86.8% of JDZ for future investors.
The PSC has been signed for Block 1 and the signature bonus due for payment on or before 22nd April 2005. As earlier indicated, the fiscal terms of the PSC for Block 1 will form the basis for future PSC terms in the JDZ.
AI
