Oil Block Winners, Nigeria-Sao Tome Authority Begin Talks

LAGOS, Jul 22, 2005 (Dow Jones Commodities News via Comtex) By Vincent Nwanma Of DOW JONES NEWSWIRES The Joint Development Authority (JDA) between Nigeria and the island country of Sao Tome and Principe have begun discussions on production-sharing contracts (PSCs) with winners of the five oil blocks offered in its second licensing round, an official told Dow Jones Newswires late Thursday.

The meeting ended with JDA expressing hope that negotiations would be completed and the agreements signed within 90 days.

"JDA is anxious to sign the PSCs to meet the expectations of their governments and peoples," said Samuel Obiorah, Executive Director in charge of monitoring and inspection, who presided over the meeting.

The companies are also negotiating their joint operating agreements.

JDA announced the results of its second licensing round about two months ago. The round covered blocks 2 to 6, located in the joint maritime boundary between Nigeria and Sao Tome and Principe.

The results, announced May 31, 2005, showed that block 2, considered the most prospective, was awarded to an operating consortium of Devon Energy Corp (DVN), Pioneer Natural Resources (PXD) and ERHC Energy Inc.(ERHE).

Devon announced early this month it had withdrawn from talks on operating agreements on the block.

JDA received 26 bids from 23 companies for the five blocks, which offered a total $433 million in signature bonuses.

In the first round of licensing, only one out of the nine deepwater blocks put on offer, was awarded. The consortium that won it is comprised of Chevron Corp. (CVX), as the operator; Exxon Mobil Corp. (XOM); and Dangote-EER.

Obirah confirmed Thursday that JDA had received the signature bonus of $123 million from the consortium.

Receipts from the licensing round are to be shared in 60:40 ratio between Nigeria and Sao Tome.

Obiorah said the next round of talks would be held in London in two weeks, to be followed by another in the United States.

Copyright (c) 2005 Dow Jones & Company, Inc.


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