|Sao Tome and Principe President Fradique de Menezes|
The possible oil bonanza has led to a very unstable political climate. The minister of Natural Resources Arlindo Carvalho gave his resignation to the Sao Tome prime minister, saying that he could not work in an atmosphere of suspicion of irregularities in oil negotiations.
The small islands in the Gulf of Guinea have the potential to be a major oil producer. Together with Nigeria, the Sao Tome government is in the process of awarding licenses to companies for exploration in shared offshore oil blocks. The Portuguese news agency Lusa quotes Mr. Carvalho as saying he was resigning because the awards of licenses for five oil exploration blocks had been delayed.
An oil analyst from the London based company Clearwater Research, Jonathan Bearman, said he believes that Mr. Cavalho, who belongs to the political opposition, did not approve of the companies, which were being awarded licenses. "The real issue is the carve up [of] these blocs between companies, and the companies that are linked to Nigerian interests and the companies that are linked to various competing Sao Tome interests,” said Mr. Bearman. “This is fundamentally what it is about and a lot of pretexts are being used for the positions that are being taken."
Ten days ago, President Fradique de Menezes fired his petroleum adviser, the influential businessman, Patrice Trovoada.
Mr. Bearman says Mr. Calvalho's resignation was likely meant to express support for Mr. Trovoada, who is widely seen as a rival presidential candidate in elections scheduled for next year.
Oil analyst Bearman says politics is a key part of the oil exploration process. "There's a lot of politics involved but if you can clear all the confusion away, it's about two issues,” he explained. “One is who commercially wins out in these awards, and the second is a longer political game, who becomes the president of Sao Tome."
Sao Tome and Principe and Nigeria have agreed to divide the proceeds of oil exploration to give Nigeria 60 percent of the share. The first off-shore block was awarded last year to a consortium of oil companies which agreed to pay $120 million as a signature bonus. The possibility of oil is a windfall for the poor former Portuguese colony, whose major export is cocoa and whose usual revenue is less than $50 million per year.