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Sao Tome's President Faces Political Crisis Over Oil Deals

Sao Tome's president, Fradique de Menezes, is facing political isolation, after his government quit in a dispute over his handling of a civil servant strike and new oil deals with Nigeria.

Prime Minister Damia Vaz D'Almeida is the latest in a long series of heads of government from the majority party in Sao Tome's parliament to quit under President de Menezes.

His resignation Thursday came after nine months on the job. He had been picked specifically as a moderate, who could get along with the controversial president, whose own party has the second most seats in parliament.

Sao Tome specialist Chris Melville, from the London-based World Markets Research Center, says the political crisis was caused mostly by a civil service strike this week, with workers asking for raises in line with the government's oil-enhanced budget.

He says the majority MLSTP party wants to see itself as an ally of average people, especially with legislative elections coming soon.

"In some respects, their departure at this time from the government, at least on the face, may be an attempt to reclaim some of that legacy in the face of President de Menezes's attempt to win over the electorate again, having seen his reputation tarnished somewhat in the most recent negotiations of the awards of the oil blocks," Chris Melville said.

Mr. de Menezes had asked the government to, "use its brain" to deal with the demand of wage increases, angering the prime minister and other Cabinet members.

Returning from a trip to Nigeria this week, Sao Tome's president also announced that agreement had been reached on awarding part of a joint development zone with Nigeria, mostly to Nigerian and little-known American companies.

This angered the parliament's main party, as well, which said more time should have been taken to make sure companies being awarded the blocks were viable partners.

Mr. de Menezes also said necessary steps had been taken for signature bonus money from the first block to finally arrive into Sao Tome's coffers, about $50 million.

That money had already been included in this year's budget, and is the basis of worker demands for higher salaries.

Mr. Melville says Sao Tome's government had previously not signed an agreement to allow the release of the bonus money, possibly because it was hoping to gain leverage in negotiations with Nigeria. The analyst says businessmen close to both governments are heavily involved in the bidding process, raising fears of corruption.

"A lot of the problems that we've seen between Sao Tome and Nigeria and the joint development zone relate, basically, to certain Sao Tome politicians becoming involved with the Nigerian companies bidding for oil blocks, and there are various commercial agreements between them," he said. "So, it's possible, once the JDZ [joint development zone] becomes operational, assuming that it does, at last we can see, sort of, normalization of the way that the area develops commercially, and in terms of producing revenue for the Sao Tomean government."

He says some of the new awards could also be revoked, if production contracts aren't signed, or new bonus money isn't delivered.

If effectively managed, it is estimated the offshore joint development zone in deep waters of the Gulf of Guinea could produce one billion barrels of oil a day within the next decade.