- Five offshore oil blocks in the joint development zone between Nigeria and São Tomé and Príncipe were finally awarded tonight, in the zone's second licensing round. The big winner was the controversial company ERHC Energy. The licensing had been troubled by a five-month delay, multiple corruption charges and frictions between the governments of Nigeria and São Tomé.
The Nigeria-São Tomé and Príncipe Joint Development Authority (JDA) - which administers the offshore zone jointly owned by the two countries - this night awarded five offshore oil exploration licences to several small-scale international companies. Most of these oil companies have US or Nigerian owners and very little experience in the sector.
The great winner of the second licensing round was Environmental Remedial Holding Corporation (ERHC) - a company giving authorities in São Tomé a big headache. ERHC is a Texas-based company controlled by Nigerian businessman Emeka Offor, who had close links with Nigeria's former military leader. These contacts, the Nigerian press holds, were used a decade ago to achieve favourable deals with the past governments of Nigeria and São Tomé for all future oil explorations in the zone.
São Tomé's current government, led by President Fradique de Menezes, has reportedly tried to limit awards to ERHC in this second round, causing the five-month delay in the licence awarding. In São Tomé, several corruption charges have evolved around ERHC, which is not known to have any deepwater oil experience. Only an intervention by an irritated Nigerian President, Olusegun Obasanjo, in late May put the licensing process back on track.
The inexperienced Nigerian-US company was thus richly awarded, exercising its option rights in all the five blocks. In Block 2, a consortium of ERHC, Devon and Pioneer consortium was awarded a 65 percent interest and was designated the block's operator. Also in Block 4, a consortium of ERHC and Noble was awarded 60 percent interest and operatorship of the acreage. Blocks 2 and 4 were the most contested and promising. Also in blocks 3, 5 and 6 ERHC was awarded interests from 15 to 25 percent.
Block 3 went to Anadarko, a relative big independent oil company based in the US and with large-scale experience in Algeria. Anadarko won a 51 percent share and the operatorship of the block, which now stands out as the most professionally led among the joint development zone's five new blocks.
Block 6 went to Filtim Huzod, a small-scale Nigerian oil company with no previous experience in the sector. The Nigerian company, which is partnering with China's Sinopec, secured 85 percent and operatorship of the acreage of Block 6. Filtim Huzod was one of many competing Nigerian oil companies owned by former politicians.
The strangest licence was however awarded on Block 5, where a 75 percent ownership and operatorship went to a consortium of International Commerce and Communications (ICC) and Oil Exploration Consortium (OEC) - two totally unknown companies. Texas-based OEC had been advertising on the Internet for months, searching for "a partner with considerable experience in oil exploration" for its West African offshore operations. It found the Cayman Islands-registered ICC; a company to which there are no references.
The Nigeria-São Tomé and Príncipe Joint Development Authority (JDA) thus seemed even less lucky in its second licence awarding round than in its first, now being pressured to produce a conclusion for all the five contested blocks. In the first round, only one of the six announced blocks was awarded, to the US giant Chevron.
The trouble of getting serious bidders to the rich and promising blocks, combined with the unlucky old agreements with ERHC, last month caused political turmoil in São Tomé. A wave of corruption allegations caused the sacking of the presidential oil adviser and the temporary resignation of São Tomé's Natural Resources Minister Arlindo Carvalho, who was re-installed by President Menezes.
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