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afrol News, 6 March - The government of São Tomé and Príncipe yesterday signed an agreement with the Norwegian seismic explorations company Petroleum Geo-Services (PGS) to start on extensive oil explorations on its continental shelf. PGS, which is headquartered outside Oslo (Norway) and Houston (Texas), is to take charge of the bulk of seismic oil explorations in São Toméan water, in the oil-rich Gulf of Guinea. The Norwegian company is doing its exploration following a contract with the US oil company Exxon Mobile. Yesterday, PGS was given the authorisation needed to start its exploration by São Toméan authorities. PGS Vice-president Dan Whealing signed the contract for these explorations with São Toméan Minister for Natural Resources, Rafael Branco. The São Toméan Minister emphasised that the contract gives PGS and Exxon the right to do seismic explorations both the archipelago's exclusive economic zone and in the smaller sector, which the country shares with Nigeria. The Nigeria-São Tomé Joint Development Zone is located in the part of São Tomé's continental shelf that lies closest to known oil reservoirs and, according to preliminary surveys, seems most promising. São Tomé and Nigeria however remain at edges on how to divide the resources originating from this joint zone after the São Toméan government recently turned down a draft agreement that only would have given the small country four percent of revenues.
According to a recent analysis by then Minister of Planning and Finance, Maria dos Santos Tebús Torres, the impact of oil should already be noted in the 2005 budget. At that time, however, it will be the expenditures and not the revenues altering the nation's small budget. By 2005, the external current account deficit was expected to widen to about 380 percent of GDP (up from currently 31 percent), "as a result of imports of goods and services associated with investments in petroleum exploration and development." Oil revenues are first expected at the end of this decade.
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The small island nation of some 150,000 inhabitants still doesn't produce any oil or gas. Neither there have been made any confirmed discoveries of exploitable oil reserves yet. This however is widely considered a matter of time and investment and São Tomé is optimistic regarding the upcoming oil wealth split on few inhabitants.