Sao Tome And Principe: US Funds Study for Airport Expansion And Deep-Water Port

February 16, 2004

Sao Tome And Principe: US Funds Study for Airport
Expansion And Deep-Water Port
AllAfrica.com
  

The United States has agreed to finance an $800,000
viability study for expanding the international the
airport of Sao Tome and Principe and building a
deep-water port in the twin-island state which is
embarking on a new era of oil exploration, the Sao
Tome internet news service Vitrina reported.

The work would be financed by the US Commerce
Department and would be undertaken by US companies, it
added.

Two American oil giants, ExxonMobil and ChevronTexaco,
are expected to be awarded the prime acreage in Sao
Tome's first offshore licencing round which is
currently under way.

Sao Tome and Nigeria jointly auctioned nine offshore
blocks last year following seismic studies which
indicated the presence of large oilfields in the area
where their territorial waters overlap.

Bids submitted in October guaranteed Sao Tome more
than US $200 million in front-end bonuses from
companies vying for the right to drill exploration
wells in these deep water blocks.

That sum is equivalent to more than 50 times the small
country's annual earnings from cocoa exports, until
now its main source of foreign exchange.

Oil industry experts originally expected that the
signature bonuses would be handed over in March, but
Vitrina quoted President Fradique de Menezes as saying
that delays in the negotiations with Sao Tome's future
partners meant the money was unlikely to arrive until
July or August.

Antony Goldman, an analyst of oil and gas development
in Africa with Clearwater Research in London, said the
Sao Tome government was still negotiating a deal with
ExxonMobil, which did not take a direct part in the
bidding process, but which held pre-emption rights
over some of the more attractive parts of the acreage
on offer.

Goldman said that once this issue had been resolved,
the award of the exploration licences would be
officially announced at a summit between Nigerian
President Olusegun Obasanjo and Sao Tome President
Fradique de Menezes.

Nigeria, Africa's most populous country and the
continent's largest oil producer, will get 60 percent
of revenues from any oil and gas found in the Joint
Development Zone. Sao Tome, a former Portuguese colony
of just 140,000 people, will get 40 percent.

Goldman said that once the two governments had awarded
the licences to oil and gas exploration companies,
production sharing contracts would have to be
negotiated with each of the licencees. That would
probably mean a further two to three month delay
before the final contracts were signed and the
signature bonuses changed hands, he added.

"They won't get their money immediately," he stressed.


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