Operators and Multiple Blocks - My opinion
I read most of the JDA bidding application info 3 or 4 years ago and I don't remember the details but here is how I view it regardless of what was once written or what the JDA/JMC is actually going by:
The most important thing for the owners of the property over the oil (in this case Nigeria and STP) is getting the oil out of the ground. This means priority number 1 is finding capable parties (oil companies) to drill in deep water and do something with it. This is why the JDA/JMC was courting the biggest oil companies as they would likely have the best resources to get the job done.
The second most important thing (after number one is taken care of) is to get the oil out of the ground as FAST AS POSSIBLE. Simple time value of money here. I can sell 10 billion barrels of oil this year at $10 net profit to the JDZ for $100 billion (just an example) or 1 billion barrels of oil over the next 10 years for $10 billion dollars per year for 10 years. Which would you prefer?
Now, lets look at the major oil companies position:
There number one goal is to have the "rights" to as much oil/acerage as possible. This is the fight for replacing their annual reserves used by developement or purchasing other oil companies rights. This is what oil companies are primarily valued for.
The second objective for the oil company is to Maximize the profit on the oil they do have rights to get. Since oil prices fluxuate based on supply, demand and fear, it will NOT always be in the best interest of one oil company to produce what reserves they do have as fast as they can. Hence, If I were XOM and I controlled Blocks 1, 2, 3, and 4. I would drill one hole at a time to figure out where to start extracting the oil at the maximum profit (in other words, only the biggest single deposits in the easiest to get at locations). I also want to control the output of these reserves once proven. This keeps the price of oil at the maximum the market will bare which maximizes the oil companies profit (and actually would maximize the portion going to Nigeria/STP which also kind of puts them on the same side of the table).
IN SUMMARY
The JDA would like a different oil company drilling in each block that is capable of drilling and utilizing as many rigs as available to the various companies in order for them to get their money sooner. Thus, I think there is a desire or unwritten rule at least, that the JDA only wants one block going to any one operator. For a Chevron/XOM, they want control over the rights to oil to maximize the valuation of their stock price.
Comments welcome
