A total of 23 oil companies have placed bids to obtain licences for five blocks in the deepwater zone jointly managed by São Tomé and Nigeria. According to the Nigerian government, mostly smaller oil companies participated in the bid round. If the applicants are qualified for a licence will be gazetted by the end of the year.

It therefore remains unclear whether the second bid round for licences in the promising Joint Development Zone between Nigeria and São Tomé has been a success. The first bid round, in 2003, also had a relatively large number of bidders. Most, however, were not found to have proven their technical capabilities to operate on these demanding deepwater blocks, and licences to only one out of six blocks were given.
The 2004 licensing round – which was announced in November and had a 15 December deadline – is reported to have produced a total of 26 bids from 23 companies for the five oil blocks that remained free after the 2003 round. The state-run ‘News Agency of Nigeria’ yesterday evening named several of the minor oil companies applying for a licence.

Despite a call by the Nigerian government earlier this month on the world’s leading oil companies to participate in the bidding round, no such bids were however mentioned. Nigeria and São Tomé had in particular hoped that the oil giant ExxonMobil would exercise its preferential rights to the remaining blocks in the zone. ExxonMobil used these rights to obtain one licence last year.

Neither, there was any notice of a possible bid by the Brazilian state oil company Petrobras, which São Toméan authorities had urged their Brazilian counterparts to ensure. The names of all the 23 bidders have however not yet been made public, probably due to conditions set in the bids.

According to the Special Adviser to the Nigerian presidency on petroleum, Edmund Daukoru, the Nigeria-São Tomé Joint Development Authority (JDA) would now start evaluating the bids. Mr Daukoru promised that a “transparent” evaluation would be carried out, in accordance with the guidelines of the JDA.

This is the second time ever that oil blocks partially belonging to the impoverished island nation of São Tomé and Príncipe are to be licensed. Oil production has yet to start in the waters of the nation of 145,000 inhabitants, and future oil revenues are expected to revolutionise the archipelago’s economy.

The largest expectations for a future oil production in São Tomé and Príncipe are so far connected to the joint development zone of 34.504 square kilometres. The zone is located close to some of the region’s major oil producing areas in the exclusive territorial waters of Nigeria and of Equatorial Guinea.

The presence of similar geological conditions in the Nigeria-São Tomé zone has made experts assume that the joint zone holds between 6 and 12 billion barrels of crude oil. Future oil revenues from the zone are to be split by a key where Nigeria receives 60 percent and São Tomé receives 40 percent.

There is however also growing interest in oil exploration in the exclusive territorial zone of São Tomé and Príncipe. The London-based oil prospector Equator Exploration is currently making promising findings in this large zone, covering 160,000 square kilometres. Equator Exploration earlier this month also announced that the company had secured important concessions in the zone.