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Sao Tome, Nigeria joint zone may see oil by 2010
Sun Oct 8, 2006 12:59 PM GMT

By Zoe Eisenstein

SAO TOME (Reuters) - Crude oil production could start as early as 2010 in a joint development zone (JDZ) shared between the tiny archipelago of Sao Tome and Principe and oil giant Nigeria, a senior industry official said at the weekend.

Carlos Gomes, executive secretary of the Gulf of Guinea Commission regional grouping, told Reuters U.S. oil major Chevron Corp. could drill a second test well by the third quarter of 2007 after announcing that it had found oil and gas in its first exploration well in an offshore block in the zone.

"If everything goes right -- because we still don't know -- say within the next two years, Chevron declares commerciality, they have another year or so before they start production," Gomes said in an interview in Sao Tome.

"Production in the JDZ could start between four to five years from now if everything goes to plan," said Gomes, who until August chaired a joint development authority set up six years ago to manage the shared offshore zone.

Nigeria has a 60 percent stake in the zone with 40 percent going the twin-island state of Sao Tome and Principe -- one of the latest oil exploration hotspots in Africa's Gulf of Guinea region after a series of big finds in the last decade.

The region, which included Nigeria, Angola and Equatorial Guinea, produces more than 4 million barrels per day and provides nearly 15 percent of U.S. crude supplies, Gomes said.

He said other firms with interests in the joint zone planned to drill in the second half of 2007 but were dependent on rigs being available. He gave no details of the companies concerned.

Further exploration licensing rounds for the remaining blocks 5 and 6 were also expected.

But it was too early to estimate the size of reserves.

"For the time being, it's all speculation. People talk about reserves of 6 billion, 9 billion, 11 billion (barrels). Who is lying? Nobody. Until you drill and do tests you cannot be sure.

"We believe there is great potential but how many barrels per day, we can't say," Gomes said. "This is a hotspot, a very rich area as far as oil is concerned."

OIL TO BENEFIT POOR

The majority of Sao Tome's population of about 170,000 live on less than $1 a day and the country relies on exports of products like cocoa, bananas and fish. It has external debt of around $300 million.

Gomes said future oil revenues were more likely to help change the fortunes of ordinary Sao Tomeans than they had in other Gulf of Guinea countries such as Angola and Nigeria where people remain desperately poor despite vast oil riches.

"I think ordinary Sao Tomeans will benefit. It's a small country. If oil helps build schools, roads, development projects, people will definitely benefit," he said.

"Sao Tome doesn't have the complexity of big countries. Here, everybody knows everybody. I think there is a much better chance investments here would be much more effective," he added.

But Gomes warned that even so, ordinary people may have to wait before they started to reap the benefits of oil.

The Gulf of Guinea Commission is a new regional body whose objective is to provide a platform for crude-producing nations in the region to discuss oil and other economic activities.

The Commission, which will be headquartered in Luanda, groups Angola, Nigeria, Cameroon, Equatorial Guinea, Sao Tome, Republic of Congo, Democratic Republic of Congo and Gabon.

http://za.today.reuters.com/news/newsArticle.aspx?type=businessNews&storyID=2006-10-08T105622Z_0...