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West Africa's oil triggers disputes

Gabon court relaxes jail sentence for oil chief
A Gabon appeal court Wednesday suspended a three-month jail sentence handed down to the head of Swiss-based oil company Addax Petroleum's local subsidiary. Gerard Hautavoine had appealed the initial jail sentence handed down by a court in the western city of Port-Gentil last November, which found him guilty of slander and contempt of court. The appeal court upheld the guilty verdict, and damages of 38,000 euros (54,000 dollars) he was ordered to pay to former deputy, Armand Tchiembo Da Graca, by the earlier hearing. However, it suspended the three-month jail sentence. Hautavoine, who was not in court, had served two weeks of his original sentence before winning a provisional release. "The law has spoken. My client's digity has been re-established," said Aimery Bhongo Mavoungou, his lawyer. The Chinese company Sinopec bought Addax Petroleum in August 2009 for 7.2 million dollars (5 million euros). Addax Gabon has existed in the equatorial African country since 2004, producing 28,500 barrels of oil per day.
by Staff Writers
Port Harcourt, Nigeria (UPI) Jan 27, 2009
A tug-of-war between the Nigerian government and the foreign oil companies that operate the country's oil fields over the renewal of their long-held leases is heating up as foreign drillers swarm across West Africa, currently the world's hottest energy zone.

The Nigerian dispute has been complicated by the efforts of a Chinese oil giant to out bid the long-established Western companies for one-sixth of Nigeria's oil reserves and by the illness of President Umaru Yar'Adua, which has laid him low since Nov. 23.

Nigeria is currently the second-largest producer in Africa after Angola, and it faces a possible resumption of a five-year insurgency in the Niger Delta, where its main oil fields are located.

Attacks on the oil installations were halted by an August cease-fire that has yet to be transformed into a viable peace agreement, and there are worrying signs that the rebels operating in the southern swamplands may resume their campaign if the matter is not settled soon.

But Yar'Adua's enforced absence in a Saudi Arabian hospital with heart problems has stalled negotiations.

Against this backdrop, the federal government wants to sort out the leasing problem as swiftly as possible to avoid further disruption to its battered oil industry.

The leasing issue is further complicated by the government's drive to impose stricter terms on foreign operators and put greater control of the oil fields in the hands of Nigerian companies through the Petroleum Reform Bill now before Parliament.

The most acrimonious of the leasing disputes is between the government and Royal Dutch Shell, which has threatened to sell off the rights to some of its concessions for $5 billion.

But the government insists that's not possible because Shell does not own the concessions.

It has also indicated that these could now be sold to the China's CNOOC, which in September bid for 23 licenses, including 16 operated by Shell, and Chevron and Exxon Mobil of the United States.

CNOOC offered $50 billion to acquire a 40 percent stake in oil reserves totaling 6 billion barrels and dangled the prospect of hefty investment in infrastructure projects.

That is a tool widely used to great effect by the cash-heavy Chinese to buy their way into infrastructure-poor countries across Africa in Beijing's global hunt for oil, natural gas and other minerals and raw materials to feed its expanding economy.

Negotiations between Shell, which has vowed to fight any move to hand its concessions over to the Chinese, and the federal government are now at a critical stage.

It seems that none of the foreign oil companies, which also include Total of France and Eni of Italy, are prepared to match the Chinese bid.

There seems little doubt that Shell will have to abandon at least some of its claims, particularly in the huge OPL 245 block, if it wants to secure an extension of its leases from the Department of Petroleum Resources.

Chevron, too, is heavily engaged in a dispute with the federal government in Abuja over its concessions, also targeted by CNOOC.

Exxon Mobil initially won an extension to its concessions from Minister of State Odein Ajumgobia, but this was overruled by Oil Minister Rilwanu Lukman.

So Exxon's now in the same boat as its competitors, although there are reports it was granted a 20-year extension by the ministry on three offshore blocks with a combined output of 580,000 barrels per day.

Elsewhere in West Africa, the scramble for the region's oil continues unabated despite deepening unrest in several states, with the Chinese making a strong showing.

Even Poland, a newcomer to the oil business, is involved. In Guinea, where the government recently changed hands after a September bloodbath in the capital Conakry, the Polish firm of Summa Energy is negotiating with the new regime to confirm the validity of its two blocks awarded by the ousted regime.

Summa is reported to have even tried to swing a deal with Polish armaments manufacturer Bumar for the new government to secure its claims.

Discoveries in neighboring Sierra Leone, still recovering from a brutal civil war in the 1990s, in early September has made Guinea more attractive.

China Sonangol, 70 percent owned by Angola's state oil company and China's Beiya International Development Corp., has taken over acreage relinquished by Hyperdynamics, a U.S. computer logistics firm that moved into oil.

China Sonangol, as one industry report recently noted, has "promised the moon to Guinea in return for oil and mining rights."



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