ERHC Energy Inc (ERHE)

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Monday, December 26 2005

Nigeria, Sao Tome treaty under threat

Michael Faloseyi, Abuja

The Joint Development Authority of Nigeria, and Sao Tome and Principe has said that allegations of irregularities over the 2004 bid round for oil blocks was a threat to the treaty between the two countries to jointly manage their overlapping boundary area.

The Authority has, therefore, invited parties to the treaty to inspect its books and bids submitted by companies during the bid exercise to clear the allegations of irregularities.

Speaking in an interview with our correspondent, Chairman of JDA, Mr Carlos Gomez, said that his greatest concern was that the allegations could affect the sanctity of the treaty between the state parties and the progress made so far.

Gomez absolved the JDA of acting under any influence in the awards of oil blocks, urging both countries to exercise their rights to peruse bids submitted by companies during the bid round rather accusing one another of irregularities.

He said that the of exemption rights granted ExxonMobil and EHRC in the Joint Development Zone, which were at the centre of the controversy trailing the bid round, pre-dated the treaty between the two countries.

The countries’ overlapping boundary in the Gulf of Guinea is said to hold between six -10billion barrels of oil. Under the treaty, Nigeria will have 60 per cent of oil produced from the zone, while 40 per cent will go to Sao Tome and Principe.

The development, experts believe may significally affect Nigeria’s hope of raising its oil reserves to 40billion barrel by 2010.

EHRC, a Nigerian, but United States-based company, was accused of exerting undue influence to emerge as a beneficiary in four of the five oil blocks put on offer during the bid exercise.

A leader of one of the opposition parties in Sao Tome and Principe, Mr. Patrice Trovoada, had criticised the process that led to the emergence of EHRC and its partners as winners in block four.

Trovoada, in an interview with our correspondent, said that 2004 bid round was riddled with confusion but insisted on the sanctity of the treaty between the two countries.

He said that the process that led to the award of oil blocks during the bid round was fraught with inconsistency, a development, which he said had led to the exit of some companies whose consortium were announced winners in the exercise.

He said, “We gave block two to EHRC and its principal partner left. We gave block four to Noble-EHRC consortium. Now, Addax is coming in the middle of the game because Noble has left.

“Now, we are facing difficulties. You don’t change players in the middle of the game.”

Probably the partners were not prepared enough in terms of internal agreement. The winning consortia have forced marriages and the problem will be with the sign of the joint operating agreement.

“This is a very sad factor, as it will slow down the process of exploration in the zone.”

Five oil blocks were awarded in the second round of bidding in the JDZ conducted in November 2004, following the approval of both President Olusegun Obasanjo and his Sao Tome and Principe counterpart, Mr. Fradique de Menezes on May 31, 2005.

The awards, which attracted signatories bonuses totalling $283million, saw the EHRC Energy Limited, getting preferential rights in all the blocks based on the company’s agreement with Sao Tome as compensation for exploratory works carried out earlier.

The Legal Consultant, ERHC Energy, Mr. Steve Ahaneku, was quoted in a report on Monday that the purported investigation by the Sao Tome Attorney-General had been orchestrated to create grounds for terminating the valid contract with EHRC and that of Sao Tome with Nigeria under the treaty.

The PUNCH, Monday, December 26, 2005
http://www.punchng.com/main/article05

(Thanks to Ams4900 on RB for finding the above article and posting it up on RB)