ExxonMobil Bankers Prod Nigeria On "Security"

A bevy of bankers flew into Abuja last week and met Thursday with President Olusegun Obasanjo to prod Nigeria into revisiting a commitment to Chinese and Korean firms that have promised to build petroleum infrastructure the multinational giant backed out of building after losing a belated bid for ownership of the coveted Block 4 in the Nigeria-Sao Tome and Principe Joint Development Zone.

ERHC On The Move could not access ThisDay Online between 1am and 2am EST this morning and so did not see the article earlier. It was posted to Investor's Hub by Homeport on the ERHE message board.

The XOM bid, part of a late-arriving package from Anadarko Petroleum, lost to a consortium led by Noble Energy. Addax Petroleum has since replaced Noble in the operatorship consortium in which ERHC is a significant partner.

While the JDZ and Block 4 are not mentioned in the article asnd the majors have had substantial physical security issues at the onshore facilities in Nigeria, the subtext of the visit was clearly concern about XOM's loss of a hugely valuable entitlement to two 25-percent choices in any of the last five blocks on offer in Round 2 of the JDZ licensing regime.

The oil giant has been unable to move the Nigerian government on Block 4 and apparently sent the bankers to plead its case under the aegis of Total, a sometimes partner.

It appears that their aegis lost, however. It is not known to what extent President Obasanjo may have capitulated, but he has not been pleased with XOM's performance on a number of promises over the past decade.

Here is the article outlining the meeting with more two dozen powerful U.S.- and European banks by Mike Oduniyi, a veteran reporter on his nation's oil business, in ThisDay Online:

Foreign Investors Express Concern over Security
By Mike Oduniyi, 11.21.2005

Foreign investors who have committed huge funds into the country’s oil and gas sector have expressed concern over the growing fears of insecurity in the country and its implication on their investments.

THISDAY gathered that about 24 top flight financial analysts, representing the world’s major investors from countries including the United States, Britain, France, Belgium and Switzerland, were in the country last week and held talks with the Federal Government.

The analysts represented major investment companies who are big lenders to many Nigerian mega oil and gas projects, namely Merrill Lynch, Societe Generale, Bank of America Securities, Credit Suisse First Boston, Morgan Stanley, UBS Investments, Goldman Sachs, J.P. Morgan and Management, and Lehman Brothers.

An official close to the meetings, held with President Olusegun Obasanjo and other senior government officials Thursday in Abuja, disclosed that the investors expressed deep concerns bordering on the safety of their investments already committed into oil and gas projects including the Liquefied Natural Gas (LNG), the Natural Gas Liquids (NGL), the Amenam/Kpono offshore oil field development and the Akpo deep offshore project.

“The investors principally came to evaluate what has been happening to their investments, if they are safe, and also to get the needed assurance to see if they will put more money in future projects in Nigeria. They needed assurance of a stable polity.

“For instance, they have been following the Nigerian government’s pronouncements on full commercialisation of the country’s huge gas resources and also raising oil reserves to 40 billion barrels by 2010. They said that they are worried about the crises in the Niger Delta,” the official added.

Credit Suisse First Boston (CSFB), for instance, signed an agreement with the Nigerian NNPC/ExxonMobil joint venture last year, to lead a consortium of Nigerian banks in raising about $1 billion for the second phase of the Oso Natural Gas Liquids (NGL).

Most of the investors are also on standby to provide funding for the NLNG trains 7 and 8, the Amenam/Kpono gas gathering project, as well as the Usan deepwater project.
A statement from French oil firm, Total, weekend said that it played host to the investors who also visited the Amenam/Kpono oil field, which is contributing 125,000 barrels per day to Nigeria’s total oil production, and the Nigerian Liquefied Natural Gas (NLNG) plant at Bonny, Rivers State.

“The financial analysts had gone to see President Obasanjo in the company of Total’s Chief Financial Officer, Robert Castaigne; President, Exploration and Production Christophe de Margerie; Senior Vice President Africa, Exploration and Production in Africa, Jean Privey; Managing Director of Elf Petroleum Nigeria Limited, Jacques Marraud des Grottes and other top company executives,” the statement reads.
The Total statement quoted Obasanjo as saying that his administration was committed to the enthronement of transparency and accountability in the oil and gas industry, as part of its anti-corruption campaign.

Obasanjo also said his government had pursued the policy of monetisation of gas instead of flaring it, expanded the country’s oil and gas reserves and increased production capacity.

The statement said further that the Minister of State for Petroleum, Dr. Edmund Daukoru who also hosted the investors also assured on the government’s preparedness to provide security in the Niger Delta.

He said that the Federal Government has adopted strategies to expand the playing field and encourage more investors in the oil sector.

Meanwhile, Daukoru, in another statement weekend stated that the Federal Government was not about to review the memorandum of understanding it entered into with the China National Petroleum Company (CNPCO) and Korea National Oil Company (KNOC).

The Nigerian government had come under pressure from oil majors over the grant of preferential rights to CNPCO and KNOC in the recent awards of oil blocks. The two Asian firms had pledged to undertake downstream projects in Nigeria.

“We wish to state for the records, that at an early stage in this process, some of the majors had offered consultancy services only, which Government found inadequate to address the necessity for a fully committed core investor.”

“We would also like to make it clear, that should there be a review of this strategic understanding with the Chinese and Korean Oil Companies, all interested parties would be made aware of such an outcome in line with Government’s commitment to openness and transparency in all its activities in the oil and gas sector,” it added.

Addax Rejected As ERHE Partner, Platts Says; Addax CEO Says Deal Still On

Addax Petroleum has been rejected as a partner to replace Noble Energy in the Noble/ERHC Consortium, according to an unnamed source who spoke to the Platts intelligence service, removing the final obstacle to Anadarko - probably in a tie-up with ExxonMobil, whom it earlier tried to bring into its bid after bids were sealed - to get operatorship of the much-disputed Block 4 in the Nigeria-Sao Tome and Principe Joint Development Zone.

The rejection was disputed by an Addaz executive in his statements to Platts, which broke the story, and is the latest in a series of hard blows against ERHC Energy, which has rights guaranteed by treaty in all five of the blocks offered in the 2004 Licensing Round.

Anadarko's chief of governmental relations, whose wife is general counsel of the Senate Committee on Energy, has apparently used a $300 million debt reduction plan proposed by the World Bank to persuade the tiny nation-state of Sap Tome to probe the award of Block 4. The first casualty of the probe was Noble Energy, and Addax is lined up to be the second.

The probe is headed by an R. Dobie Langenkamp, a two-time Dept. of Energy official and an old college classmate of the couple, Greg and Judy Pensabene.

The latest sign of trouble came Monday, when the Joint Development Aithority, which administers the JDZ under the direction of a joint ministerial council with representatives from both nations, removed a press release saying it had accepted a Memorandum of Understanding between Addax and ERHC under which Addax would replace Noble.

It then removed two "timeline" documents, each of which carried a different timeline for the same events.

Then ThisDay Online revealed that Hallmark Bank, whose CEO is under arrest, had been unable to produce the Block 1 signature bonus paid to Nigeria, some $58 million.

Behind these machinations are the powerful oil companies that control the National Energy-Environment Law and Policy Institute (NELPI) at the University of Tulse College of Law.

The NELPI advisory board and executive committee are heavily peopled by ExxonMobil and Anadarko executives, with six Exxon and four Anadarko attorneys currently serving.

The Pratt's "leak" of the JDA developments may be authentic information, but there is a good chance that the information is designed to further disrupt the awards process and stop the Joint Devel;opment Authority from completing the awards process and obtaining some $400 million in signature bonus fees.

Anadarko offered $90 million for operatorship of Block 4, where it tried to bring in ExxonMobil as a joint venture partner but was rebuffed. The JDA found the slow-go drilling schedule of Anadarko unacceptable, and gave the block to ERHC/Boble Energy on condition that they pay the same fee and mount a much more vigorous effort, requiring them to drill three wells in four years.

Then Langenkamp went and took control of the Sao Tome probe, contradicting the Atty. Ge. of Sao Tome, the ostensible person in charge when reporters asked if there was any evidence of wrongdoing. The attorney general said there was not, but Langenkamp said there had to be an investigation. The Sao Tome government was powerless to stop it as virtually all the principals in the Sao Tome government are potential subjects of the probe.

Then President Olusegun Obasanjo's wife was apprently murdered at a plastic surgery clinic in Spaon and a plane with key fraud investigators was brought down in Nigeria, both on the same day; neither bodies nor the black box and cockpit voice recorder from the plane were recovered. Those events have apparently moved President Obasanjo to make peace with ExxonMobil, which has been quietly warring with his anti-corruption government, and developments in the JDA followed soon thereafter.

Most Nigerina and all American news organizations have shied away from the huge changes going on as majors and minnows fight over 32.5 billion barrels ofoil said to be waiting in the tranquil waters of Block 4. The JDZ's nuine blocks may contain a total of 14 billion barrels of oil, according to the Houston Chronicle.

Here is the limited account of these events from Platt's,psted on Raging Bull:

Posted by: ztock (the poster is a well-known ERHC "basher")
In reply to: None Date:11/9/2005 10:55:58 PM
Post #of 13145

JDA rejects Addax replacement of Noble - source.
8 November 2005
11:03 AM

Platts Commodity News
English
Copyright 2005. Platts. All Rights Reserved.

Cape Town (Platts)-8Nov2005/1058 am EST/1558 GMT The Abuja-based Nigeria-Sao Tome Joint Development Authority managing a deepwater licensing round in the Gulf of Guinea has rejected Addax Petroleum's bid to replace Noble Energy as Houston-based ERHC's partner and operator in Block 4, an industry source told Platts Tuesday.

Addax Petroleum managing director Jim Pearce said he had "heard something about that," and would know more later in the day. A spokesman for Addax said he was unaware of the decision, while the JDA's spokesman said he had not yet seen "anything official." The JDA accepted a Memorandum of Understanding signed by Addax Oct 25 to replace Noble as a partner in the block, subject to certain conditions, including the consortium's commitment to pay its $90-mil signature bonus and to drill three wells during the first exploration phase of four years.

Pearce Monday said the JDA had "officially approved" its replacement in
the Block 4 consortium but that details were still being worked out.

"At this point of time we just have a memorandum of understanding between
ourselves and ERHC. But we do have official approval from the JDA to replace Noble as operator," Pearce told Platts on the sidelines of a Global Pacific oil and gas conference in Cape Town. ERHC, which enjoys preferential rights without the obligation to pay any part of the signature bonus, was awarded a 60% equity stake and operatorship of Block 4 with Noble in May. The other partners, Nigeria's Conoil (20%), the pairing of Nigeria's Hercules and Overt (10%), Centurian and Addax (5)% and Nigerian minnow Godsonic Oil and Gas (5%), agreed to pay a signature bonus of $90-mil for the block.

The JDA last awarded five blocks in June last year after several delays
due to wrangling and accusations of corruption between the countries.
The JDA has since been criticized for stalling talks on production
sharing contracts for Blocks 2, 3, 4, 5 and 6 in a second licensing but last week said the PSCs would be signed off before the end of the year.

Addax Petroleum, which is strongly focused on Africa and whose principal upstream operations are in Nigeria, expects to raise its production from 80,000 b/d to 100,000 b/d by mid 2006, Pearce said. Proven and probable reserves of Okwori, which it acquired in 1998 after Ashland pulled out of Nigeria, are estimated at between 69-to -186-mil bbl, while operating costs have dropped from $12/bbl to $5.4/bbl in 2003, he said. The company's CEO Jan Evert Mulder, who was scheduled to give a speech at the Cape Town conference on Thursday, quit his position last week.

NIGERIA ARRESTS HALLMARK BANK BOSS Nigeria's Economic and Financial Crimes Commission last week arrested Hallmark Bank's chairman and chief executive, Marc Wabara, in connection with $58-mil in funds belonging to the Joint Development Zone, Nigeria's ThisDay newspaper reported Monday. Hallmark Bank has been shut down by Nigeria's central bank. "The money, Thisday gathered, was placed in fixed deposit account with Hallmark Bank by JDZ but could not be produced on demand," it said.

Officials at Hallmark Bank, a founding member of the First Consolidated Bank, confirmed that Wabara was being quizzed for what they described as "some operational issues," the newspaper said. The twin-island state of Sao Tome and Principe, which has a population of about 170,000, signed an agreement with Nigeria in 2001 to split the revenue from any oil found in their shared offshore waters.

-Jacinta Moran, jacinta - moran@platts.com.