ERHC Energy Inc (ERHE)

[Homeport]

STP News: Islands see Brazil as 'strategic partner' on oil, development fronts - FM Tiny

Rio de Janeiro, Jan. 15 (Lusa) - Sao Tome and Principe count on Brazil to be a "strategic partner" in the Gulf of Guinea islands' bid to become an oil producer and a "services and business platform" for that West African region, the country's foreign minister said Thursday.

Carlos Tiny, who is on a nine-day visit to Brazil, told Lusa he planned to discuss the possibility of future oil exploration operations in the islands' Exclusive Economic Zone with Brazilian major Petrobrás.

Sao Tome has repeatedly said it wanted to set up a so-called "Lusophone consortium" with Petrobrás, Portugal's GALP and Angola's SONANGOL to explore its vast EEZ for the first time.

"The oil industry is robust in the (GoG) region", the STP foreign minister said. ""We have oil in our deep waters and we think Brazil has the technology, know-how and political will to cooperate".

Tiny acknowledged that falling oil prices could crimp deepwater exploration and development, but he expressed hope that crude price would soon stabilize at "an acceptable and just level, making (new) development viable".

He said Sao Tome's plans to auction EEZ blocks were "slightly delayed" but that he expected "advances" in the next two years.

As to the islands' offshore Joint Development Zone (JDZ) with Nigeria, Tiny said that commercial quantities of oil had yet to be established after one test well drilled by Chevron in Block 1 in 2006, but that drilling was expected soon in at least two other JDZ blocks.

"In 2010, drilling will have taken place in (JDZ) blocks 2 and 4", he said.

Beyond the prospect of oil, he said Prime Minister Rafael Branco's government saw Brazil as a "strategic partner" in the STP hope of becoming a "services and business platform" for the entire GoG region.

Tiny, who is preparing an upcoming trip to Brazil by Branco, said the prime minister's first official visit to Brasilia would be marked by the signing of bilateral cooperation accords in many fields, including oil, health, education and rural development.

Tiny began his nine-day visit in Salvador on last Monday. After his stay in Rio he will travel to Brasilia.