By Hector Igbikiowubo

21-07-03 The military coup in the West African Island nation of Sao Tome and Principe which led to the overthrow of President Fradrique de Menezes, has threatened the $ 200 mm bidding round for nine oil blocks put on offer by the Sao Tome-Nigeria Joint Development Zone (JDZ). The investors including RoyalDutch/Shell, ExxonMobil, ChevronTexaco, ConocoPhillips and Devon Energy among others may have decided to watch the turn of events in the Island nation before making any commitment to the bidding round.
However, when contacted to speak on the company's disposition towards the bidding round for oil blocks in the JDZ following the military coup, the Shell Nigeria External Relations Director, Reverend Precious Omuku, said the company cannot comment on the events there for now. But it was gathered that the company has a policy of not carrying on business in a chaotic environment, and would rather await the restoration of normalcy before investing there.

It would be recalled that at the height of the Ogoni struggle involving MOSOP, Shell had the support and coverage of the military junta headed by General Sani Abacha to carry on with oil and gas exploration, but it did not. Presently, the tension generated by the Ogoni struggle has subsided appreciably, yet, the company insists on not carrying on its business in the area, saying it awaits the invitation of the Ogoni people.
An ExxonMobil spokesman in Nigeria, Adedayo Ojo, also gave indication that the company cannot speak for its counterpart operations in Sao Tome and Principe, adding that he does not have details. Also speaking on the development, a spokesman of ChevronTexaco Nigeria, Wole Agunbiade, explained that the company does not have any position yet on the developments in Sao Tome and Principe, noting that the situation there is still fuggy.

Industry operatives who spoke on the developments in the Island nation were of the opinion that so much funds were involved in the bidding round and investors would want to ensure that their investments are safe, and the atmosphere conducive for them to carry on their business. It would be recalled that the Joint Development Authority which administers the JDZ had in May this year, put on offer nine oil blocks valued at $ 200 mm for international bidding, explaining that this was just the beginning of an exercise it intends to continue.
After putting the blocks on offer, the administrative authority of the zone disclosed that it will make public the results of the tender for joint offshore oil acreage amid calls for greater transparency in the mineral-rich region.

This follows pressure mounted on developing countries and oil and mining companies to release more information about massive payments for natural resources, which campaigners say is often misused in some of the world's poorest nations in Africa. Some Western oil companies have said they are ready to reveal financial details, including multi-million-dollar "signature bonuses" on oil concessions, but are prevented from doing so by confidentiality agreements with the host governments.
"We're not going to wait for them, we will announce the bonuses ourselves in Sao Tome," Taju Umar, chairman of the Nigeria-Sao Tome and Principe Joint Development Authority (JDA), told. He said they would be released publicly after the October 18, 2003,deadlinefor bidding. Details of royalties, profit-oil rates and taxes will also be made public as part of the production-sharing agreements, which are loosely based on Nigerian model, he added.

The oil-rich Gulf of Guinea region, which includes major producers, Nigeria and Angola, is a hotspot of exploration and development. Sao Tome, an island nation of just 150,000 inhabitants is eager to join the league with shared offshore acreage. The JDA has been on a road show in the USA, trying to woo investors for nine ultra-deepwater offshore oil blocks after Nigeria and Sao Tome set aside maritime border disputes to form a 60:40 % venture.
Each block carries a minimum signatures bonus of $ 30 mm and Umar said the cumulative bonuses could exceed $ 200 mm. Initial interest had been expressed from majors such as ExxonMobil, Shell and ChevronTexaco as well as mid-size firms like ConocoPhillips, Marathon, Anadarko Petroleum and Devon Energy, the chairman disclosed.

The JDA, located just 20 km from Nigeria's billion-barrel Akpo discovery, contains an estimated 6 to 11 bn barrels of oil in place and could be producing up to 1 mm bpd within 10 years, Umar said.
First oil could be produced in four or five years.