Sao Tome's claims of flawed deals will not impact round:Daukoru
731 words
21 December 2005
07:19
Platts Commodity News
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Copyright 2005. Platts. All Rights Reserved.
Sao Tome's claims of flawed deals will not impact round:Daukoru
Nigeria and Sao Tome will sign Production Sharing Contracts with winners of the five oil blocks in the controversial 2004 licensing round in the Nigeria-Sao Tome Joint Development Zone early next year despite accusations by Sao Tome's attorney general that some of the deals were seriously flawed, Nigeria's oil minister Edmund Daukoru said Wednesday.
"It will have absolutely no impact, I am treating this as quite low key," Daukoru told Platts.
The Abuja-based Joint Development Authority awarded blocks 2,3,4,5,6 last May, and according to the JDA timetable, the PSC was first scheduled to be signed by mid November but was later shifted to December.
A report published Dec 9 by the Sao Tome Attorney General's Office said several of the companies awarded the blocks lacked the technical know-how and the financial muscle to carry out the work, and that the procedures used to select the companies did not satisfy the minimum standards. "The second licensing round suffered serious procedural flaws, including the award of equity to several companies which were either unqualified or which had inferior qualifications in technical and financial terms," the report said.
CALLS FOR US INVESTIGATION INTO ERHC ENERGY
The attorney general has also called for a US investigation of the award of oil blocks to US minnow ERHC Energy, which was granted preferential rights and options of several of the blocks, claiming ERHC's participation in the round deterred qualified companies from the bidding.
But Daukoru dismissed fears that the report would put pressure on the government of Sao Tome and Principe to review the award of blocks.
"The relationship with ERHC is nothing to do with the JDA as such. This is an issue for the company and Sao Tome. They will have to deal with the legal issues,it is for them to sort out," Daukoru said.
A spokesman for the JDA which administers the offshore zone jointly owned by the two countries - also said the allegations would not affect ongoing negotiations.
"As far as we are concerned, negotiations for the PSC with the block winners are progressing and at advanced stage. It will be ready for signing next January," said the spokesman.
"The whole thing about Sao Tome investigating the ERHC Energy or the 2004 licensing round is all about internal politics of the country and does not have anything to do with the JDA or the treaty existing between Nigeria and Sao Tome," he added.
ERHC SAYS CLAIMS A 'DIRECT ATTACK' ON NIGERIAN GOVERNMENT
Houston-based ERHC Energy, speaking through its counsel, Steve Ahaneku, last week said the report was a "direct attack" on the Nigerian government and said it should take exception to the claim that round was a failure.
ERHC, which is controlled by Nigerian millionaire Emeka Offor, who allegedly had close links with Nigeria's former military leader, said the government of Sao Tome participated fully in all aspects of the process that led to the final award of the five blocks.
In July, Devon Energy, which unlike ERHC has got significant deepwater experience, walked away from equity interests in the most-sought after Block 2 that it considered too small to pursue.
In October, the JDA rejected a bid by Swiss-based Addax to replace Noble Energy, which had been selected to carry out the drilling and exploration work on behalf of the winning consortium in block four, but withdrew from its partnership with co-operator ERHC without explanation.
ERHC already had a memorandum of understanding with Addax to pay Noble's commitment to pay a $90-mil bonus and carry out a three-well drilling program in the first exploration phase.
The Attorney General's report has been submitted to parliament, which is due to debate it shortly, to the government and to President Fradique de Meneses.
De Menezes, whose tiny and impoverished island nation is hoping for a spectacular oil boom, has faced several political crises at home as politicians trade accusations of corruption in the scramble to secure a share of the expected windfall.
Under the terms of a treaty signed in 2002, Nigeria, which is already Africa's largest oil producer, will take 60% of all oil and gas revenues. Sao Tome will take 40%. --Jacinta Moran, jacinta_moran@platts.com
