*UPSTREAM NEWS ERHC* March 3, 2006
The event was delayed until 14 March
& The blame game then swiftly subsided
Nigeria and Sao Tome delay on Block 4 signing
By Upstream staff
NIGERIA and Sao Tome have once again failed to sign off the award of joint operatorship of Joint Development Zone Block 4 to Addax Petroleum and Houston minnow ERHC Energy, despite senior officials, including Nigerian Minister of State Edmund Daukoru, gathering to do so in Abuja, writes Barry Morgan.
The event was delayed until 14 March. "This does not send the right signal to investors it is not the way the oil business should be conducted," Daukoru said.
The blame game then swiftly subsided after it became evident that the Nigerian side had also contributed to the setback.
It was understood some gaps remained in the joint operating agreement since Nigerian independent Conoil, which has a 20% stake, had yet to finalise a proposed merger with Godsonic Oil&Gas with a 5% share and so Sao Tome could not be expected to approve a production sharing contract with blank spaces.
Godsonic's key Nigerian backer died in a plane crash last year, leaving loose ends that Conoil chief executive Mike Adenuga mistakenly assumed could be tied up after the state signatories had approved the PSC.
At the same time, Chevron is understood to have entered talks with Conoil to acquire the independent's stake in Block 4 in exchange for a commitment to develop Conoil's deep-water block OPL-257 in Nigeria's own waters and possiblly reimburse the $100 million signature bonus it paid to secure the licence.
Other arguments also emerged regarding the $18 million paid by Addax to farm in to ERHC's position on blocks 3 and 4 and whether this sum should rather be paid into Sao Tome's coffers as US advisers to the Sao Tome Attorney General urged, but this notion was dismissed by the Joint Development Authority as having no basis in law.
Meanwhile, Sinopec's memorandum of understanding to join ERHC as joint operator of Block 2 remains intact, while the Chinese giant has also shown an interest in Anadarko-operated Block 3.
In addition, Chevron is continuing to sniff out equity prospects in Block 2 and BP is said to be taking an interest in Block 5.
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03 March 2006 00:01 GMT | last updated: 03 March 2006 00:01 GMT
