Nigeria and Sao Tome sign $ 123 mm oil deal

Nigeria and Sao Tome signed a $ 123 mm (about N 16,482 bn) deal with ChevronTexaco and ExxonMobil for the rights to drill for oil in the Gulf of Guinea, under the auspices of the Joint Development Zone (JDZ) set up by both countries.
The two countries have contracted the rights for blocks in the JDZ located in the Gulf of Guinea estimated to hold at least 6 bn barrels of oil.

The multi-million dollar deal which was concluded at a formal ceremony in Sao Tome was for Block-1, one of five oil blocks, put on offer by the Joint Development Authority (JDA) in 2003. The JDA administers the JDZ.
It was gathered that ChevronTexaco JDZ owns 51 % of block-1 and will act as operator, while Esso Exploration and Production Nigeria-Sao Tome "One" owns 40 %, and Dangote Energy Equity Resources 9 %.

While speaking at the signing ceremony, Mr Carlos Gomez, Sao Tome's chief representative on the Joint Exploration Authority (another body created to monitor exploration activities in the zone), said the development was an unparalleled event for the economies of both countries. Gomez also said first oil from block-1 was expected to start flowing in 2008. Mr Tim Cejka, president of ExxonMobil Exploration Company said the company appreciated the opportunity to be one of the first companies to work with the JDA in the joint development zone.
"There are large areas around the world with significant hydrocarbon potential that are off limits because they lie under unresolved international territories. We hope that Nigeria's and Sao Tome and Principe's approach will be emulated by others as growing world energy demand will continue to require new sources of supply," he said.

The signing of the PSC provides for Block 1 exploration to proceed in the JDZ, followed by economic development of discovered resources, if successful, for the benefit of both nations. It also provides for disclosure of payments made under the contract, in keeping with the transparent manner in which the bid round was conducted. The consortium fully supports these efforts to ensure openness and public accountability in oil and gas activities in the JDZ.
The block was awarded in April 2004 and is located in 5,700 feet (1,800 metres) of water approximately 190 miles (300 km) north of the city of Sao Tome.

Two months ago, the Joint Ministerial Council (JMC) of the Nigeria-Sao-Tome Joint Development Zone (JDZ) after its 8th meeting in Abuja, gave approval for the conduct of another licensing round for five oil blocks in the zone. This round which comes on the heels of the first licensing round where nine blocks were put on offer will be conducted without prejudice to the rights already exercised by Environmental Remediation Holding Corporation (ERHC), and validated by the JDA, and the existing remaining pre-emption rights of ExxonMobil.
Both EHRC and ExxonMobil had obtained preferential rights to take a big share in several blocks in recognition of work they carried out before the creation of the JDA in 2000.