See also:
» 06.11.2009 - São Tomé to establish state oil company
» 31.10.2006 - Angola to explore São Tomé oil
» 01.06.2005 - São Tomé-Nigeria oil blocks finally awarded
» 25.05.2005 - New oil block awards after São Tomé corruption scandal
» 16.12.2004 - Many bids on Nigeria-São Tomé oil blocks
» 14.12.2004 - Bids awaited for Nigeria-São Tomé oil blocks
» 20.10.2004 - Brazil's Petrobras interested in São Tomé oilfields
» 23.09.2004 - US expands military presence in Africa

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São Tomé and Príncipe
Economy - Development

São Tomé receives first-ever oil revenues

afrol News, 2 February - The delayed signing of an oil exploration and production sharing agreement for the first shared São Tomé and Nigeria block was announced by ChevronTexaco yesterday. With the signature, the poor island state of São Tomé and Príncipe will now receive its first-ever oil revenues, a front-end bonus of US$ 49 million. Exploration is to "commence soon."

Block 1 of the Nigeria-São Tomé and Príncipe Joint Development Zone already in April 2004 was awarded to a consortium headed by the US oil giant ChevronTexaco. The final exploration and production sharing contract between the consortium and the governments of São Tomé and Nigeria has however been delayed for several months, for unknown reasons.

Yesterday however, representatives of the two governments and the consortium met in the archipelago's capital, São Tomé, and signed the long awaited contract. This in turn releases the US$ 123 million bid by the consortium, which is to be paid to Nigeria and São Tomé for the exploration rights. 60 percent goes to the Nigerian government and 40 percent (US$ 49 million) to authorities in São Tomé, representing the country's first-ever oil revenues.

According to a statement by ChevronTexaco, exploration activities on Block 1 are now "expected to commence soon," when the production sharing contract comes into legal effect. This would happen "once remaining outstanding conditions have been met," the Texan oil giant said.

- We are very pleased to have reached this milestone, said Jay Pryor of ChevronTexaco's Nigeria/Mid-Africa unit. "The governments of Nigeria and São Tomé and Príncipe deserve much recognition for their leadership and foresight in establishing the joint development zone, which today has led to this first production sharing contract signing."

Mr Pryor further praised the two governments for their commitment to transparency and accountability. "The production sharing contract provides for the public disclosure of payments made under the contract, in keeping with the transparent manner in which the bid round was conducted," he said. The transparent administration of the joint development zone has widely been praised as a model for oil projects in poor countries.

- We commend the governments of Nigeria and São Tomé and Príncipe for embracing these values and indicating their resolve and commitment to ensure a successful realization of a new standard of accountability, added Mr Pryor. "ChevronTexaco fully supports these efforts to ensure openness and public accountability in the development of oil and gas activities in the joint development zone."

Mr Pryor further noted that, as part of the company's commitment to local communities, ChevronTexaco was collaborating with the government of São Tomé and Príncipe on a project designed to roll back malaria, while also helping to develop programs to enhance HIV/AIDS prevention and awareness among the country's teenagers. ChevronTexaco on earlier occasions has been strongly criticised for its lack of commitment to local communities in its operations in Nigeria.

Block 1 last year was awarded to a consortium comprising ChevronTexaco (51 percent), ExxonMobil (40 percent) and the Nigerian-Norwegian oil joint venture Dangote Energy Equity Resources (9 percent). The block, which will be operated by ChevronTexaco, is located approximately 300 kilometres north of the city of São Tomé in 1,800 meters of water. It is often referred to as the zone's "golden block" and expected to hold more than one million barrels of crude oil.

Despite the high transparency standards in the joint development zone, one of the consortium's members already has been accused of corruption in the awarding process. Dangote Energy Equity Resources (EER) is co-owned by Aliko Dangote, a wealthy businessman from northern Nigeria who played a prominent role in raising funds for the re-election of Nigerian President Olusegun Obasanjo in 2003.

The Norwegian owners of EER founded their company only months before the bidding round of Block 1. Also they were known to have personal ties to President Obasanjo. As EER was awarded 9 percent of the block in April last year, the international oil community was strongly surprised by the sudden success of this "mysterious company".

Olegario Tiny, leader of the Joint Development Administration (JDA) of the Nigerian São Toméan zone, in July last told the Norwegian business daily 'Dagens Næringsliv' that he did not understand why EER had been awarded a part of Block 1. "I think it has something to do with Nigeria," Mr Tiny said.

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