US funds study for airport expansion and deep-water port

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.