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Addax blocked in JDZ Block-4
THE Nigeria-Sao Tome Joint Development Authority has pulled back from approving Swiss explorer Addax Petroleum's bid to step into the shoes of Noble Energy as prospective operator of deep-water Block-4 in the joint development zone between the two countries.
The Abuja-based authority withdrew a press release announcing its approval that Addax should replace Noble as operator from its website amid speculation that fresh delays could set in and that signature for production sharing contracts and joint operating agreements on the other blocks offered under the second JDZ round blocks 2, 3, 5 and 6 will get postponed until 2006.
Houston-based ERHC Energy already has a memorandum of understanding with Addax to partner it in Block-4 and pick up Noble's commitment to pay a $90 million signature bonus and carry out a three-well drilling programme in the first exploration phase.
It is understood that Sao Tome and some Nigerian elements had complained that due process had not been followed and that the Joint Ministerial Council had not been consulted.
Under a preferential rights deal, ERHC is carried and can avoid paying any part of the signature bonus, leaving any partner-operator necessarily concerned about the capacity and willingness of Nigerian independents to pay their portion and find their share of initial exploration costs in a timely manner.
It is understood Noble was worried about this aspect and wanted to tighten terms to force penalties on defaulting partners.
Anadarko Petroleum bid highest and was originally Sao Tome's favoured candidate for Block-4, but has not been canvassed by the JDA to return to the fray.
A rebid would take another month to organise and most players see direct talks with original bidders as the likeliest way forward if Addax the fourth highest bidder is not confirmed.
Fellow bidder Centurion Energy of Canada has not aggressively pursued operatorship in the wake of Noble's departure and Nigeria's Conoil, already awarded 20% of Block-4, would be challenged to match Addax's financial resources.
Other equity holders on the block include independents Godsonic Oil&Gas, Hercules Petroleum and Overt.
Since the Nigerian side wishes to swiftly conclude the round and move on, many believe the Addax bid will still win out once the dust settles on this latest fracas.
Besides, Nigeria's Petroleum Minister Edmund Daukoru would have to convincingly propose any rejection directly to President Olusegun Obasanjo at this late stage.
Meanwhile, talks are proceeding with other suitors for remaining blocks awaiting PSC signature.
An Iranian joint venture between Oil Exploration Operations Company (OEOC) and ICC (together holding 75% of Block-5), alongside local indie Sahara, has committed a vessel to undertake seismic on the block.
However, the ability of other minnows awarded participation on other blocks to cough up signature bonuses and post performance bonds remains uncertain.
