DRILLING IN JUNE!

Big, price-driving news from the Gulf of Guinea and the Joint Development Zone - Sinopec is going fishing. The company plans to start drilling Blacok 2 and Block 4 as soon as next month.

While we don't axctually believe this will happen, it shouldn't be long now. Here's the news report, courtesy of our old friend, Mark St. Amour:

>blockquote>JDZ/STP News: Oil exploration set to kickoff in offshore zone shared
with Nigeria - official

Lisbon, May 21 (Lusa) - Oil exploration activity is poised to revive
next month in the offshore Gulf of Guinea zone shared by Nigeria and
Sao Tome and Principe after a three-year hiatus as the two countries
consider the possible auctioning of new blocks beginning in 2011.

Jorge Santos, the head of the bilateral authority overseeing the Joint
Development Zone (JDZ) told Lusa Wednesday, that Chinese operator
Sinopec would begin exploration in Block 2 in June and that Block 4
Swiss-Canadian operator Addax would begin drilling in July.

"There's some expectation of finding something. Both in Block 2 and in
Block 4, where Addax has very encouraging perspectives", Santos said
in a telephone interview from Sao Tome.

"By the end of the year we'll be in a position to declare the zone
commercially viable or not", he added.

The STP head of the Abuja-headquartered Joint Development Authority
(JDA) also said the body was in negotiations for the carrying out of
additional seismic studies in four other JDZ blocks - 7 through 10 -
with a view to opening a new licensing round as early as 2011.

Sufficient seismic data, especially 3D studies, were still lacking for
those blocks, Santos said, adding that it would take 18 months to two
years to complete the new studies.

Blocks 7, 8, 9, and 10 would "in general be smaller" than the six JDZ
blocks auctioned since 2004, with areas ranging from 750 to 1,500
square kilometers, he said.

Santos said the upcoming drilling in Blocks 2 and 4 was expected to
last at least one month and would be followed by a period for analysis
of results.

He downplayed the significance for the JDZ of US major Chevron's
inconclusive results from exploration in Block 1 in 2006, noting that
the company had drilled only one well and "possibly not at the right
spot".

"There's a certain (topographical) decline between Block 1 and Block
2, allowing one to deduce that all the expectations built up around
the first block could lie in the second one", he said.

Underlining that at least three exploratory wells were required to
establish a field's commercial viability and a fourth well for
development purposes, Santos said Chevron might well be waiting to get
results from Sinopec's drilling in Block 2 "to decide what to do in
future".

On yet to be drilled Block 3, he said US mid-tier operator Anadarko
had adopted a "more passive stance", possibly given its major
interests in the Gulf of Mexico.

Despite pressure for Anadarko to drill, Santos said the JDA could "not
oblige" the company to act and that its plans remained unknown.

The JDA chief also said that the future of JDZ Blocks 5 and 6,
auctioned in 2005, but still lacking production sharing contracts,
remained unclear, due in part to the operators, ICCOOECA and Filtun
Huzodo, respectively, facing "some difficulty in mobilizing the
necessary investment".

The uncertainty surrounding those two blocks, he added without
elaboration, also involved disputes over the interests of minnow ERHC,
a US-registered company controlled by Nigerian powerbroker Emeka
Offor, which has rights and interests in most of the JDZ blocks.

ERHC also has major rights to future blocks in Sao Tome and Principe's
exclusive economic zone, which the island government has repeatedly
said in the past few years it was preparing to auction.