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UPDATE 1-Nigeria, Sao Tome sign long-delayed oil deals
Tue Mar 14, 2006 1:34 PM ET
(Adds details of stakeholders, background)
By Tom Ashby
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UPDATE 1-Nigeria, Sao Tome sign long-delayed oil deals
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ABUJA, March 14 (Reuters) - Nigeria and Sao Tome on Tuesday signed production sharing contracts with oil companies on two of the deep-water exploration blocks the two countries jointly administer in the Gulf of Guinea, after months of delays.
Nigeria, Africa's top oil producer, and the tiny twin island nation of Sao Tome and Principe, which has not yet started producing oil, have a joint development zone in one of the world's exploration hotspots.
The Joint Development Authority (JDA) signed a production sharing contract for block 3 with a consortium led by U.S. independent Anadarko Petroleum Corp. (APC.N: Quote, Profile, Research). The signature bonus for the block is $40 million.
Anadarko has a 51 percent stake in the block and is the operator. Other stakeholders are Houston-based ERHC (ERHE.OB: Quote, Profile, Research) and Canada-based Addax who together have 25 percent, DNO (DNO.OL: Quote, Profile, Research) and Energy Equity Resources (EER) of Norway with 10 percent, and smaller partners Ophir of South Africa and Broadlink of Nigeria with 4 percent.
The JDA also signed a production sharing contract for block 4 with a consortium headed by ERHC and Addax, who together have 60 percent of the block and are the operators. The signature bonus is $90 million.
Others with stakes in block 4 are Nigerian firms Conoil (NTOL.LG: Quote, Profile, Research), with 20 percent, and Godsonic, with 5 percent. Hercules, controlled by Canada-based Centurion, has 10 percent while smaller Nigerian company Overt has 5 percent.
The JDA had been due to sign a production sharing contract for block 4 on Feb. 24 but the signing fell through at the last moment in what Nigerian Minister of State for Petroleum Edmund Daukoru called a "very embarrassing" episode.
The failed signing came just over two weeks after U.S. firm Pioneer Natural Resources Co. (PXD.N: Quote, Profile, Research) withdrew from two of the Nigeria-Sao Tome blocks after failing to agree terms with its partner, ERHC.
ERHC, which is controlled by private Nigerian firm Chrome, has since gained approval from the JDA to bring in Chinese refiner Sinopec (SNP.N: Quote, Profile, Research) (0386.HK: Quote, Profile, Research) as its new partner in block 2.
Daukoru said the production sharing contract for block 2 would be signed on Wednesday.
Blocks 3 and 4, along with three others, were awarded last May after a turbulent five-month delay plagued by disagreements between the countries and accusations of corruption.
The JDA had previously signed a production sharing contract for block 1 in the joint development zone with a consortium led by U.S. energy giant Chevron (CVX.N: Quote, Profile, Research). The drilling of the first well on that block was completed a week ago but the results are still a closely-guarded secret.
"So far drilling is progressing steadily with indications of activity in the well of a positive sort. We are awaiting a discovery very soon," Daukoru said during the signing.
© Reuters 2006. All Rights Reserved.
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