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To: balaw who wrote (1331)	3/15/2006 11:27:43 AM
From: balaw	Respond to of 1694

UPDATE NEWS Nigeria, Sao Tome sign oil deal with ERHC, Sinopec [FXCDYCV] By Camillus Eboh ABUJA, March 15 (Reuters) - Nigeria and Sao Tome on Wednesday signed a production sharing contract with a consortium led by ERHC <ERHE.OB> and Sinopec <SNP.N><0386.HK> for one of the deep-water oil exploration blocks they jointly administer. 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 the Gulf of Guinea, one of the world's most promising exploration areas. The consortium led by little-known Houston-based ERHC and Chinese energy giant Sinopec will pay a signature bonus of $71 million for block 2 in the joint development zone. The two firms are the operators. ERHC, which has been at the centre of controversies since it gained stakes in all five exploration blocks awarded by Nigeria and Sao Tome last May, brought in Sinopec as its partner for block 2 after two previous partners pulled out. China is among several Asian economic heavyweights vying with the United States for West African oil in an effort to secure supplies from outside the volatile Middle East. Chinese, Indian and Korean firms have competed fiercely for other Nigerian oil concessions. Other stakeholders in block 2 include London-listed Equator Exploration <EEL.L> and ONGC <ONGC.BO> of India, which together have 15 percent. A & Hartman has 10 percent while Foby Engineering and Momo Oil and Gas have 5 percent each. DELAYS The Nigeria-Sao Tome licensing round was repeatedly delayed by arguments between the two countries and accusations of corruption. After the blocks were finally awarded, the process of negotiating contracts was also delayed for months, with companies pulling out and new allegations of bribery. U.S. firm Devon <DEV.N> ducked out of a partnership with ERHC in block 2 last year. It was replaced by another U.S. company, Pioneer Natural Resources Co. <PXD.N>, which pulled out on Feb. 7 because of disagreements with ERHC. In block 4, ERHC also lost its initial partner when Noble Energy withdrew and was replaced by Canada-based Addax Petroleum <AXC.TO>. ERHC, listed in the United States but controlled by private Nigerian firm Chrome, emerged as the big winner of the joint development zone licensing round despite having little exploration experience or financial means to carry out the work. It was the only company to gain stakes in all five blocks awarded last May. It was named operator, along with other companies, in two of the blocks. The Joint Development Authority says ERHC had been granted preferential rights on stakes in the blocks in return for exploration investment in Sao Tome in the 1990s, before the joint development zone was set up. Details of those investments have not been made public. Late last year, the Sao Tome attorney-general said there were indications that ERHC made improper payments to Sao Tome officials. The company denies any wrongdoing. Nigeria has dismissed the attorney-general's report as a product of internal politics of Sao Tome, which holds elections later this year and where political tensions have risen as the country prepares to enter the world of big oil. (c) Reuters 2006. All rights reserved.