- Tomorrow is the last day in the 2004 bid round for five oil blocks in the Joint Development Zone between São Tomé and Nigeria. Authorities hope that the world's principal oil companies, with proven expertise in deepwater operations, will participate despite the low interest in the 2003 bid round.
In November, the Nigeria-São Tomé Joint Development Authority (JDA) - managing a large maritime zone in the oil-rich Golf of Guinea between the two countries - opened its second licensing round for promising oil blocks. By noon tomorrow (15 December), oil companies have to submit their applications at JDA headquarters in Abuja or its liaison office in São Tomé.
The 2003 bid round, which was the first ever including the island state of São Tomé and Príncipe, had been a rather disappointing exercise. Six blocks were opened up for bids, but the JDA was only able to award licences to operate on one block, Block 01. For Block 01-06, there had been no bids or the bidding companies had not proven their technical capabilities to operate on these deepwater blocks.
Block 01 last year was awarded to the multinational oil giants Chevron and ExxonMobil, in addition to Norway's Equity Energy Resources (EER). ExxonMobil had exercised its preferential rights to the blocks in the joint zone. The parties are reported to have paid US$ 123 million as signature bonus to acquire the block.
This years' licensing round comprises of the five blocks that the JDA was unable to award last year. The Authority however claims to have better possibilities at this stage as new seismic data had been acquired for the blocks.
According to the JDA, industry activity in neighbouring blocks in Nigeria and Equatorial Guinea "has been significant" and the new seismic data of the joint Nigeria-São Tomé zone "suggests that similar levels of activity are warranted here."
The Special Adviser to the Nigerian presidency on petroleum, Edmund Daukoru, this week called on the world's leading oil companies to participate in the bidding round. Mr Daukoru in particular urged ExxonMobil to exercise its preferential rights to the remaining blocks in the zone, but urged all oil "companies with proven expertise in deepwater technology and operations" to take part in the bid round.
According to reports by the Lagos-based daily 'This Day', ExxonMobil in Nigeria is widely expected "to exercise its rights in three of the five oil blocks put on offer." Nigerian officials had told the newspaper that ExxonMobil "may yet decide to pick up 25 percent of blocks two and four under the current exercise, in addition to submitting bids of its own."
Also in São Tomé and Príncipe, government officials have lobbied for a greater participation in this year's bidding round. The São Toméan presidency has urged the political leadership of fellow Portuguese speaking country Brazil to influence the national energy company, Petrobras. Petrobras in October this year, after years of São Toméan lobbying, finally announced its interest.
São Tomé and Príncipe remains an impoverished island nation as it is on the doorstep to become an oil producer. Approximately 53 percent of its population of about 140,000 is living below the poverty line. Human capacity, according to a recent World Bank study, is "low" regarding the new and major tasks coming up as the country is hosting the international oil industry.
The World Bank recently gave the government a credit of US $5 million to assist São Tomé in improving its governance capacity, economic management and supervision. It was in particular found necessary to strengthen "petroleum revenue management supervision across national institutions."
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