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SAO TOME / ERHC HISTORY -this should answer

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Southern Man   Friday, 01/22/10 01:13:27 AM
Re: travel12343 post# 195809
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SAO TOME / ERHC HISTORY -this should answer your question,
Short answer - Enviromental Remediation Holding Company ERHC

SAO TOME / ERHC HISTORY

From Internally Unviable State towards a Petro-State

International interest in STP’s potential as an oil producer in the late
1990s can be attributed to technological advances which allowed for the
possibility of oil production in ultra-deep offshore areas in the Gulf of
Guinea. From the point of view of the oil industry, STP’s territorial waters
have great geological potential. Most notably, the geological structures of the
Niger Delta extend into STP’s territorial waters in the North. Oil exploration
in the territorial waters of STP’s neighbours was highly successful in the late
1990s, with prominent oil discoveries such as Agbami, Nnwa and Akpo on
the Nigerian side to the North and Ceiba on the Equatorial Guinean side to
the East.


Even before the oil majors became interested in STP, the STP government entered into various memoranda of agreement, letters and stipulations regarding the evaluation and study of oil and gas reserves with Environmental Remediation Holding Corp. (ERHC), a small US firm run by Sam Bass (a deal-maker largely credited with winning the STP contract), and, at certain times, with the South African Procura Financial Consultants (PFC)36. The government, led by Prime Minister Raul Neto, signed an
agreement in June 1997 with ERHC and PFC (as a junior partner) to
negotiate on behalf of the country with other oil companies for the award of all government concessions in the sector37. In July 1998, the government and ERHC established a joint venture petroleum company, Sociedade Nacional de Petroleos de São Tomé e Principe (STPetro), with the government holding 51 percent of the shares38.


One month after the creation of STPetro, the US oil major Mobil and
STPetro signed a letter of intent to enter into a technical assistance
agreement to evaluate the early hydrocarbon potential of offshore acreage
located in the country’s exclusive economic zone (EEZ). Under the terms of
the exclusive agreement, Mobil completed an 18-month technical evaluation
in STP oil blocks numbered 1 through 22, which were previously scheduled
for an open oil-licensing round39. Geco-Prakla (now WesternGeco) – a
Schlumberger subsidiary40 which was previously hired by ERHC as a
technical advisor, conducted seismic studies.

Following successful exploration, Mobil selected 5 of the 22 oil blocks for exploitation. This could make the now merged ExxonMobil one of STP’s key oil producing firms in
future, although the company’s right to the oil blocks was not legally watertight
and the terms were re-negotiated in January 200341.
A major obstacle to STP’s emergence as a petro-state was the
undetermined maritime boundaries with the neighbouring countries.
Uncertainty over property rights deterred major oil companies from
committing themselves to investments in STP’s territorial waters. Indeed,
Mobil was able to clinch an exclusive deal in STP (which apparently
included the right to first refusal on all blocks) as other major companies
such as Exxon and Shell were believed to have backed away from the
offering because of unresolved issues concerning STP’s maritime boundaries
with its neighbours42.

A major stumbling block was the STP-Nigeria boundary where some of
the richest oil fields are suspected. Former President Miguel Trovoada
confirmed to us that STP originally wanted to divide the maritime boundary
between STP and Nigeria according to the so-called rule based on
‘equidistance lines’ but Nigeria argued in favour of the ‘proportionality
principle’ which would have given Nigeria a much bigger share of the
offshore acreage. According to Trovoada, STP ‘didn’t have time or money
for litigation’ so a compromise agreement was struck during the visit of
Nigeria’s President Obasanjo to São Tomé in August 200043. Trovoada stated
that the basis of the agreement in Nigeria’s favour was worked out between
him and Obasanjo while the finer details were worked out by the STP
government and the Nigerians44. Instead of delineating a boundary between
the two countries, Trovoada and Obasanjo agreed to establish a Joint
Development Zone (JDZ) to be jointly administered by the two countries,
with oil revenues being split 60: 40 in Nigeria’s favour.

A treaty for the creation of the JDZ was subsequently signed and ratified by both countries.
The Joint Authority, which will manage the JDZ with a seat in Nigeria’s
capital Abuja, was inaugurated in January 2002. The agreement with Nigeria
paved the way for an oil-licensing round in STP, which (after many delays)
was scheduled to take place by the end of 200345. Somewhat less contentious
were demarcation agreements reached with Equatorial Guinea and Gabon
(in June 1999 and April 2001 respectively), though a final resolution of all of
the boundary issues has not yet been reached46. All these agreements
provided the necessary security of property rights for foreign investors and
previously reluctant oil majors have renewed an interest in the country.
STP’s emergence as a potential petro-state highlighted the country’s lack
of human resources to deal with the new tasks of state diplomacy. As a
consequence, the STP government had to rely on external actors in its
petroleum policy. Indeed, ERHC initially usurped some of the country’s
sovereign rights as the firm was solely responsible for the development of
STP’s entire oil and gas sector.

ERHC apparently even arranged meetings
with UN and US representatives for President Miguel Trovoada and Prime
Minister Raul Neto during their state visits to the US47. In other words, a
private firm replaced an aspect of STP’s state diplomacy. The government
was also dependent on the assistance of neighbouring states. Traditionally, it
was assisted by Angolans48. Miguel Trovoada told us that Angola’s national
oil corporation Sonangol helped the STP government in negotiations with
Mobil in 1998-199949. More recently, Nigerian assistance was sought. In an
agreement made during President Trovoada’s term of office, Nigeria even
agreed to help STP build an oil refinery50. While Nigerians have gained
much influence in STP affairs for the last two or three years, the STPNigerian
relations soured in mid-2002 as a result of President Menezes’
announcement to renegotiate oil agreements. But the STP government is
once again relying heavily on Angolan expertise, Sonangol is once again
providing technical assistance and the Angolans have reportedly assisted
the STP government in negotiations in Nigeria in 200251. Meanwhile, the
abortive military coup in July 2003 (see article by Gerhard Seibert in the
current issue) seems to have strengthened the hand of the Nigerians who
played the key role in producing a negotiated settlement with the coup
leaders. The impact of these recent events on Santomean petroleum policy is
yet to be seen.


As STP still does not have a proper public body in the upstream oil sector
today, the current licensing round is being managed by the Norwegian
oilfield service company Petroleum Geo-Services (PGS). Ahead of future
licensing rounds, PGS was given the exclusive rights to conduct and sell
seismic surveys to further assess the business opportunities in STP’s oil
sector52. In addition to collecting and marketing its own data, PGS was
allowed to market some of the previously collected exploration data of other
companies, in apparent contradiction of the earlier Geco-Prakla deal53. The
government, which is hoping to set up a Petroleum Training Institute, also
relies on outsiders including PGS to train some Santomean staff in
exploration data processing techniques, geology etc.54. In addition to all
these external actors, the IMF and the World Bank have provided technical
assistance in the areas of petroleum sector taxation and oil resource/contract
management, respectively55.

While some external actors assisted the STP
government at various times, lack of experience not only made it difficult for
STP to obtain the best deal with foreign oil companies but also with the
Nigerian government during the bilateral boundary negotiations.
The government’s inexperience in dealing with oil-related issues was
matched by inconsistency in petroleum policy and controversy regarding
state-company relations. During the second term of Trovoada’s presidency,
the STP government had a major rift with ERHC and its CEO Geoffrey
Tirman over contractual terms and the dispute was referred to arbitration at
the Paris-based International Chamber of Commerce in 199956. The
arbitration proceedings only ended after a new owner was found for ERHC
– the Nigerian Chrome consortium, which bought a controlling interest in
ERHC from Geoffrey Tirman’s Talisman Capital Opportunity Fund Ltd.
Subsequently, the name ERHC was changed to Chrome Energy Corp. The
Chrome consortium, which belongs to the Nigerian billionaire Emeka Offor,
was able to re-negotiate the original 1997 agreement between ERHC and STP
and replace it with a new agreement in May 200157. But controversy has
continued to surround STP’s petroleum policy.

The government also had a
disagreement with WesternGeco over the use of WesternGeco’s seismic data
by its rival PGS58. More recently, President Menezes openly criticised the
contracts with PGS and announced the government’s intention to renegotiate
the contracts with ERHC/Chrome, the JDZ agreement with
Nigeria and ExxonMobil’s oil concessions (see below).
Despite all these difficulties, STP looks set to become an oil producing
state in the next few years. According to hypothetical future projections by
the IMF, STP could produce almost 100,000 barrels of oil per day in less than
a decade (although these figures are highly speculative)59. This would come
close to the production levels of the other established producers in the
region such as Equatorial Guinea and Gabon (see Table I). This raises the
question of how this transformation may impact upon the country’s political
economy, which is discussed in the next section.

Tab. I.— OIL PRODUCTION PROJECTIONS FOR PETRO-STATES IN THE REGION, 2002-2011
(thousand barrels/day)
Country 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Angola 916 941 1082 1398 1704 1915 1948 1914 1778 1658
Cameroon 96 87 79 72 64 56 50 45 41 37
Congo-B. 261 235 212 213 223 204 188 173 158 138
DR Congo 24 24 22 21 19 17 15 12 8 6
Equat. Guinea 221 231 220 195 173 154 137 124 110 98
Gabon 275 264 244 216 204 197 188 167 148 125
São Tomé e P. 0 0 0 0 10 30 30 48 48 96






Petro-States and the «Resource Curse»
Many petro-states have previously suffered from the phenomenon
known as the «resource curse»60. Despite being well endowed with natural
resources, petro-states experienced economic underdevelopment, military
conflict and political mismanagement, a finding supported by many
quantitative and qualitative studies including those by neo-liberal writers
such as Jeffrey Sachs61.

Mineral wealth leads to a number of adverse economic effects.
Quantitative studies show that states with a high share of natural resource
exports have had lower economic growth rates than states without those
resources62. Economics literature in the last two decades has focused on the
appreciation of a country’s exchange rate (especially appreciation of the
country’s currency) caused by large foreign exchange inflows generated by
mineral exports, a phenomenon known as Dutch Disease. Large inflows of
foreign exchange make exports of agricultural and manufacturing goods
more expensive and draw resources from non-mineral sectors, thereby
stifling the development of those sectors.

One of the key political effects of relying on mineral resources revenues
is the neglect of non-mineral tax revenues. Since non-mineral taxes are of
little importance, the ruling elite has less incentive to nurture other economic
sectors, to provide basic infrastructure or even to ensure a basic social peace.
Frequently, the rulers are not required to provide much tangible support to
natural resource investors themselves, apart from a suitable legalcontractual
environment. Oil companies in Africa have often built their own
access roads, provided their own security and – being enclave economies –
they relied little on local business linkages. In the words of de Soysa, sub-soil
assets «provide quick profit and largely require material resources rather
than extensive human co-operation for their extraction»63. As a result,
mineral exports undermine good governance and political accountability to
society.

With a view to the coming oil boom in STP, an American economist has
already warned about the potential future dangers of the resource curse on
the twin islands, and the IMF similarly noted that currency appreciation in
the wake of oil development in STP could ‘reduce the competitiveness of the
rest of the economy’ in the long run64. However, foreign observers have
perhaps underestimated the already evident impact of the resource curse in
STP to date.

While the STP government had only officially received no more than US$
15-20 million from ERHC/Chrome, PGS and ExxonMobil combined by the
end of 2002, the huge future potential of STP’s oil has already had a
pronounced impact on STP government policy. The STP government
certainly lacked experience in dealing with oil company managers and
lawyers, but much of the country’s petroleum policy to date also lacked
transparency and accountability.

A detailed analysis of the oil contracts between the STP government and
foreign oil companies points to major flaws, which can hardly be explained
through lack of experience. The original 1997 contract between STP and
ERHC was exceedingly favourable to ERHC. While the agreement was renegotiated
with Chrome in 2001, it was still extraordinarily advantageous to
the Nigerians and included:

– the option to acquire a 15% interest in up to two oil blocs of ERHC’s
choice in the Joint Development Zone (JDZ);
– 100% interest in 2 blocs of choice in STP’s Exclusive Economic Zone
(EEZ) without payment of any signature bonuses (down payments for the
exclusive right to explore for and produce oil in the delineated areas), after
three have been chosen by the STP government;
– an option to acquire a 15% interest in an additional 2 blocs of ERHC’s
choice in the EEZ;
– 5% of STP’s share of signature bonuses paid by companies in the EEZ;
– 10% of STP’s share of profit oil extracted in the JDZ; and
– 1.5% overriding royalty in the gross production of crude oil in the
JDZ65.

Working Paper at the Department of Applied Economics and Management, Cornell
University, New York, January 2002; IMF, «São Tomé and Príncipe…», op. cit. : 16.
65. Business Wire, Houston, 16 January 2002.

It was entirely unprecedented that ERHC/Chrome would not have to
pay a signature bonus for the oil concessions to STP. Signature bonuses for a
single oil block elsewhere in the Gulf of Guinea previously fetched between
several million US$ to over US$ 300 million in Angola. It is also
unprecedented to grant a company rights to future petroleum taxation and
payments, which would ordinarily accrue to the state budget. According to
IMF estimations, ERHC/Chrome’s taxable income from the JDZ could reach
roughly US$ 70 million per year for the period 2005-2024, amounting to
some US$ 1,446.8 million in total66. ERHC/Chrome has only paid several
million to the STP government since 1997 and it is not expected to do much
in return for the future income stream.

We are not aware of any similar precedent in the history of Africa’s oil
industry since the end of colonialism. It is an unparalleled development to
give so many oil blocks and prerogatives to a single company without a
bidding process, let alone a small obscure firm with few notable assets
which was on the verge of bankruptcy at one point. Indeed, ERHC was
already in financial trouble when Tirman, who first became an investor in
the company in 1997, took control in August 1999. There was no money to
run the company, nor any cash to make a final US$ 1 million payment to the
STP government67 The respectable Platt's Oilgram News wondered as early as
July 1998 how a company «with a scant US$ 1.5-million in cash and just US$
30 million in market capitalization» could find a partner for an estimated
US$ 50 million cost of the concession sale68. This lack of capital was matched
by ERHC’s lack of expertise for the contracted task.

It is clear that political connections were key to the various agreements. A
major beneficiary of the 2001 agreement is obviously the Nigerian side –
Chrome of Emeka Offor and his associates. Emeka Offor – the Chrome
owner – has links with the inner circle of the Nigerian government including
Vice President Atiku Abubakar, one of Nigeria’s five top men in charge of
petroleum policy69. Offor also happens to be amongst the biggest financial
backers of the ruling PDP in Nigeria. Allegations have even been reportedly
made that Atiku Abubakar is «part owner» of ERHC/Chrome. However, no
proof has been presented and the allegations have been denied by both
sides, so they must be taken with caution70. But it is clear that Emeka Offor
and the Chrome consortium have had friends at the top levels of both the
Nigerian and the STP government.

The 2001 agreement between Chrome Oil and STP might have involved
more than meets the eye. An interesting detail is that the agreement was
actually conditional upon the creation of the JDZ. The two sides decided that
the agreement would only become effective when the treaty between
Nigeria and STP on the joint development of petroleum and other resources
in areas of the EEZ of the two nations had become effective. One can only
speculate whether the Nigerian government’s stance over the JDZ had
anything to do with Offor’s business interests.

The contract between STP and PGS is less favourable to the foreign
company by comparison with ERHC. PGS is also in a different league from
ERHC. Although the company had experienced serious financial difficulties
in the last twelve months, PGS was considered a serious player in the oil
servicing sector71. However, the contract between STP and PGS also raises
questions of accountability and transparency. PGS came to STP at the time
when Nigerian business interests became influential; interestingly, the
company previously did substantial work in Nigeria, where it reportedly
had a son of the Nigerian President Olusegun Obasanjo amongst its
employees72.

The secret deal with the STP government gave PGS the right to
three offshore blocs of its choice73. While PGS told us in an interview that
this option only becomes effective if PGS does not get a return on its
investment in STP74, this contractual arrangement is also exceedingly
favourable to the company.

Another beneficiary of STP’s questionable oil contracts was Chris
Hellinger, the South African who has had many non-oil business interests in
STP. Hellinger has been a key player in STP for two decades75. He enjoyed
top-level political connections in STP, Gabon and Angola and has been
alleged to have had good links with individuals closely associated with
South African Military Intelligence and French intelligence. In STP,
Hellinger owned and operated a charter air service, the exclusive Marlin
Beach Hotel in São Tomé, the Bom-Bom resort in Principe, a fleet of boats
and the company Solar Construction, although he told us that he wants to
sell some of his assets on the twin islands76. In the 1980s, he led the way in
oil exploration in STP through his company Island Oil Exploration Ltd. and
he still holds some shares in ERHC/Chrome, which were apparently part of
a payment for Island Oil’s seismic data77. In February 1999, Hellinger signed
a contract with the STP government for creating a logistical petroleum base
through Island Oil which obtained the sole right to oversee the financing
and development of an offshore logistics centre78. As with the ERHC and
PGS contracts, there was no competitive bidding round for the contract
despite the keen interest of others. The project apparently failed because of
the inability to attract enough financial backers79.

The business plans for logistics centres in STP have potentially an even
more sinister side. The STP government granted another South African
company (probably not associated with Hellinger), WADCO, a concession
for running a free trade zone on Principe, covering roughly one-third of the
island, which would also house the offshore logistics centre80. Beyond the
question of oil development, the concession also raised the question of
logging in STP, as WADCO was allowed to conduct logging in the free trade
zone81. This would perhaps be of particular interest to WADCO's Malaysian
associates; Malaysian interests have gained an unenviable reputation for
unsustainable logging in a range of African countries, from Zimbabwe to the
DRC. In effect, one third of Principe was opened to logging and was handed
to a single concessionaire for at least 50 years in complete contradiction of
previous government policy.

Given the impact of logging operations in
other African countries, the government’s u-turn could have potentially
disastrous consequences for the unique ecosystem of Principe which houses,
amongst others, half a dozen bird species found nowhere else in the world.
Until now, no logging has taken place. Fortunately for Principe, the entire
project has stalled and is likely never to take off for lack of business partners
and lack of political will. However, as the concession was previously
granted at the highest level, this episode also raises uncomfortable questions
on accountability and transparency.


Even though oil production has not yet started in STP, petro-money has
already started to influence Santomean politics. The 2001 and 2002 elections
were perhaps a harbinger of things to come in that money seemed to play a
greater role and Santomean political movements were assisted by Nigerian,
Angolan, Gabonese and Taiwanese financial assistance. In an interview with
the authors of this article, former President Miguel Trovoada stated that,
while the polls were very peaceful, «the results of the elections were faulty
through the intervention of money»82. This may be something of an
exaggeration, but it is probably correct that Trovoada’s party was outspent
in the 2002 election campaign. Money already played a part in elections
throughout the 1990s (with Angolan and Gabonese money influencing
Santomean politics) and access to foreign aid was undoubtedly an attraction
for election candidates. But it is perhaps less than a coincidence that the
prospect of the first petro-dollars coincided with more expensive political
campaigning and the entry of new actors.

Politics in STP became no longer a
matter of power and prestige but access to vast financial resources. Indeed,
Trovoada himself received oil money in the past. In an interview with a
Nigerian magazine in February 2002, an associate and cousin of Emeka
Offor of Chrome confirmed that previously «Offor assisted the party of the
former president [Trovoada] to win their elections and when they won they
installed the current president [Menezes]»83.

There were definitely major irregularities in the conduct of STP’s
petroleum policy and it is widely believed that the beneficiaries of the
various oil deals included top-level Santomean negotiators and members of
a 7-men petroleum commission during 2000-01. Of actual payments, it
appears that a sum of $550,000 mentioned in an ERHC/Chrome report for
the US Security and Exchange Commission was paid to those involved in
the Santomean oil deals, but the money was channelled to the South African
Procura and STP Energy Corporation, a British Virgin Islands registered
company, and the beneficiaries are not known to us84. We could not confirm
certain other payments to Santomean individuals, which our sources
suggested.

Some criticism of the oil deals has already been publicly voiced, although
no individuals were singled out. In the run-up to the 2002 parliamentary
elections, President Fradique de Menezes announced that he wanted the
public prosecutor to open an official inquiry into the oil exploration
agreement negotiated between his predecessor and PGS, referring to it as
«very strange». Menezes told a news conference that he has «doubts» about
the deal because it allows PGS to choose three offshore blocs to operate after
concluding its seismic exploration of the country's waters85. While this could
perhaps be dismissed as little more than an election tactic in a general
election, concerns about STP’s petroleum deals have also been expressed by
the World Bank and the IMF. The two institutions concluded that oil
revenues from previous oil exploration agreements were managed with little
transparency by the STP government. The IMF stated in its usual diplomatic
language that «oil sector negotiations in 2001 had lacked transparency» and
«the ERHC settlement diverted São Tomé e Príncipe’s potential oil revenue,
raising serious governance problems»86. The prevalence of resource curse
effects was already apparent even before STP started producing any oil.


In essence, the questionable oil contracts point to the political impact of
relying on external rents, which lowers the incentives for the ruling elite to
serve the domestic constituency. But the effects of the resource curse are
nothing new to STP. The writings on STP have largely overlooked the fact
that the resource curse has already had major effects on STP for much of the
country’s independence due to the unusually high inflow of foreign aid and
loans. The economic effects of the resource curse were, for instance, visible
in terms of food consumption. A 1998 study on food security in STP

On attaining office, he stressed that all of the main parties could
have input into governmental policies, which would be aimed at redressing
a range of social ills from «anarchy» and a lack of public service ethics, to
robbery and vandalism99. The ADI and the Trovoadas, who were so heavily
criticised by Menezes before the elections, found themselves once again in
government with Menezes and Pinto da Costa’s MLSTP (although the
Trovoadas’ power was considerably weaker than a year earlier).

Also,
somewhat surprisingly, the new Minister of Infrastructure, Natural
Resources and Environment (whose remit includes the oil portfolio) was
Rafael Branco, who was personally involved in previous oil deals. Even after
Menezes’ appointment of a new government under Maria das Neves in
October 2002, Branco retained the oil portfolio. Indeed, in early 2003, Branco
was STP’s lead negotiator in re-negotiating the oil deal with ERHC/Chrome
– the company from which he previously received personal favours
(although Branco lost his ministerial position following the 2003 coup)100.
The extraordinary close interlinkages within the elite have facilitated
corruption and the lack of accountability, which we have discussed in the
previous sections. Compared with other African countries, the spoils of
foreign capital inflows could be shared within a smaller elite. While political
events have seen power shifting out of the hands of the Trovoada family –
who were in power at the time the various oil deals were made – neither the
new President nor the successive Prime Ministers have demonstrated a
serious desire to prosecute those involved in the ERHC/Chrome or PGS
deals, rhetoric notwithstanding.

This is despite the fact that both would
seemingly have a lot to gain from embarrassing a family that has played a
major role in Santomean politics since independence; the durability of
Menezes’s ‘technocratic’ new order depends on his ongoing ability to
sideline established political actors and movements. This reluctance reflects
the nature of elite formation in São Tomé, which centres on shifting alliances
between the key political leaders and their factions. Periodic, seemingly
bitter quarrels are resolved with new deals being made; unlike mainland
tropical Africa’s recurrent political strife marked by ethnic and regional
divisions, there are relatively few people who have to be enticed to accept
any shifts in the balance of power (or paid off). Whilst Menezes has
everything to gain from the short term political marginalization of Trovoada
– and for that matter, Pinto da Costa as well – there is little doubt that he has
more to lose from their long term exclusion (not least because of their
personal connections in Nigeria, Angola, Gabon and elsewhere). This is
particularly the case as his own personal network is more shallowly rooted
on the islands than those of his opponents. In the end, it is better to leave
open the possibility of further deals with a few key elite figures than risk the
emergence of a new «anti-system» political movement representing more
marginalized segments of island society. Such a movement could well
emerge in the political vacuum that would be created by the demise of longstanding
political actors.


It is, of course, possible that some adjustment to the process of
privatizing state resources can be made. Many foreign observers believe that
President Fradique de Menezes’ criticism of previous oil sector contracts was
genuine and, even if it will not lead to any prosecutions, it may lead the STP
government to renegotiate them in more favourable (if still comparatively
modest) terms. Such a turn of events was backed by the World Bank and the
IMF, which have become increasingly irritated with the Santomean failures
to implement economic reforms and the propensity for self-dealing. Indeed,
in May 2002, President Menezes announced his intention to abrogate or renegotiate
the previous oil contracts and agreements including the contract
with Chrome Energy, the STP-Nigerian JDZ and ExxonMobil’s oil licences.
Menezes previously requested technical assistance from the World Bank to
scrutinize the contract with Chrome Energy and to conduct a cost-benefit
analysis of it, although this was reportedly a pre-condition of the IMF staff-
100. Little is known in public about this. But it has been reported that Rafael Branco’s two
children were among those who had received college scholarships from ERHC (Los Angeles Times, 24 May 2003).


monitored programme in STP. The World Bank funded a confidential
review of existing contracts and treaties for the STP government, which was
conducted by a Houston-based law firm. Menezes also turned personally to
a multitude of US actors for legal and technical advice and assistance in renegotiating
oil contracts101. These included the likes of the Washingtonbased
consultancy Petroleum Finance (a specialist energy consultancy), Joe
Kennedy and his company Citizens Energy, Yale University and the law
firm Williams & Connolly (which previously represented the former US
president Bill Clinton)102.


The Nigerian government was highly displeased with this course of
events. President Obasanjo flew to São Tomé in early June 2002 insisting on
the sanctity of previous oil contracts and the Nigerian government made
serious threats against STP103. But the Nigerian pressure did not change the
position of Menezes who could count on the protection of the US
government, which pledged military assistance to STP, beefed up security at
its Voice of America relay station in STP and had – at some point – even
considered the establishment a regional naval base for aircraft carriers and
patrol boats in STP104. It would appear that Menezes is hoping to be able to
rely on US protection in a departure from the strategies of his predecessors,
who relied on Angolan, Gabonese or Nigerian patronage.


Obviously, Menezes’ intention to re-negotiate oil contracts is unlikely to
lead to prosecutions of past corruption since this would cause too much
upset within the Santomean political elite. Some cynics have privately stated
that the renegotiation of contracts may be simply used to make personal
gains for some members of the elite (even if not Menezes himself), who did
not share in the earlier deals (with the by-product of providing more
favourable business terms for the country). At the time of writing
(September 2003), no-one in the Santomean elite have been tried in
connection with the earlier oil contracts. A genuine investigation of past
corruption and mismanagement would constitute a discontinuity, as – until
now – any skeletons in the closet, even those belonging to political «rivals»,
remained firmly under lock and key.


101. Menezes’ personal lead on this issue was quite significant, as it threatened to sideline the Minister of Infrastructure, Natural Resources and Environment Rafael Branco, who was
nominally in charge of oil affairs. Some of the different actors approached by Menezes also
felt somewhat perplexed as they learned that they were one of many «consultants» to the
President.
102. Personal communications with a senior staff of an inter-governmental organization
(August 2002).
103. ECONOMIST INTELLIGENCE UNIT, «EIU Country Report – July 2002», op. cit. : 35; personal
communications with a senior staff of an inter-governmental organization (August 2002).
Likewise, ExxonMobil was displeased with Menezes’ statements and the company sent a
delegation to STP in July 2002 to talk with the Santomean authorities.
104. The idea of a naval base emerged in the wake of the events of 11 September 2001 in the US.
It was promoted by the African Oil Policy Initiative Group (AOPIG), whose members
include representatives from ChevronTexaco (which produces vast amounts of oil,
amongst others, in Angola and Nigeria), the US junior oil firm Vanco Energy (which
controls vast oil concessions in Africa including Equatorial Guinea, Morocco and Namibia)
and the State and Defense Department officials. Energy Compass, 28 June 2002; Personal
communications with a senior AOPIG member. President Menezes strongly supported the
creation of a naval base, not least because this would provide STP with a deepwater port
which the country lacks (and the Nigerians failed to deliver despite some promises made
in the past). However, in October 2002, the US Assistant Secretary of State for African
Affairs, Walter Kansteiner, denied reports that the US was planning to build a military
base in STP but he revealed that the US was still exploring other ways of expanding
military co-operation with STP, amongst others, by providing patrol boats to STP. BBC
News Online, 9 October 2002.
Indeed, despite all the presidential rhetoric about the unfair oil contracts,
the Santomean government was able to reach an accommodation with the
foreign oil companies. In early 2003, the government re-negotiated the oilrelated
contracts including those with ExxonMobil and ERHC/ Chrome.
While some of the most onerous terms have been eliminated from the new
ERHC/Chrome contract – i.e. terms which entitled the oil company to a
share of future government taxation – ERHC/Chrome was able to gain some
concessions elsewhere105. As a result, the Nigerian owners have been left
with a highly favourable contract. Meanwhile, President Menezes admitted
that he previously received a secret payment of US$ 100,000 from ERHC's
chairman, which he claimed was a political party contribution106. While this
payment appears to have been made before the cooling of relations with
Nigeria and seems to have been unrelated to the contract re-negotiation in
early 2003, it tainted the reputation of the president. It confirmed our
prediction made in September 2003 that Menezes’ rhetoric about renegotiating
oil contracts would amount to little more than minor changes in
contract terms.
In this context, we strongly disagree with the assessment of Patrick
Chabal who argued that «strong social bonds and pressures» in STP make it
difficult for politicians to plunder the state for their own ends107. We believe
that the opposite is true. While Chabal rightly observed that it is «not
uncommon for members of the same family to support opposite parties»,
strong social bonds and pressures and the absence of a large number of
groups for sharing the pay-offs made plunder more feasible. Indeed, as
Seibert argued:
In an environment where corruption and other malpractices have become
a structural feature, the social pressures exercised on somebody who tries to
refrain from such practices cannot be underestimated. A state functionary
who does not participate in corruption or malpractices is easily insulted as an
oaf108.
Since all the major political parties used the state coffers for private
enrichment, few genuine anti-corruption measures were ever undertaken.
Prosecution of corrupt officials could compromise other members of the elite
and could backfire. For instance, in May 1994, an MLSTP-initiated
parliamentary commission of inquiry submitted a report to the National
Assembly on the misuse of funds arising from the sale of foreign food aid
which implicated PCD-GR members; in turn, the parliamentary leader of the
ruling PCD-GR threatened to disclose corrupt dealings involving the
MLSTP. Subsequently, the corrupt dealings involving food aid proceeds
were never prosecuted or even properly investigated and they continued

105. According to the old 2001 contract, ERHC/Chrome had the option to acquire a 15% interest in up to two oil blocs of ERHC’s choice in the Joint Development Zone (JDZ). The new 2003 contract gave ERHC/Chrome a 14% stake in nine especially promising oil blocks in the JDZ. Therefore, while ERHC/Chrome will not automatically receive part of the government’s petroleum taxation, the company will have a stake in all oil blocks in the JDZ. From an oil company’s point of view, this is very favourable in that risk is diversified.

If you only have a stake in two oil blocks and they strike no oil, you go empty-handed.
With a stake in nine blocks, your chance of striking oil in at least some of them gives a
much better likelihood for a steady flow of future revenue.

during the rule of the MLSTP and the ADI109. So political parties usually
decry corruption whilst in opposition but fail to implement veritable anticorruption
measures whilst in office.
If we go by the past experience of other oil-rich states, corruption and
mismanagement are likely to be exacerbated with the arrival of oil money
and the affairs of ordinary Santomeans are likely to become even more
remote from the political decision-makers. Perhaps the best hope for STP is
that there is sufficient external pressure from international institutions,
creditors and the incipient civil society to ensure greater transparency in the
distribution of oil revenues. Otherwise, STP is likely to suffer the same ills as
other oil-rich states in Africa, except that any civil war or social unrest is
highly unlikely in the gentle Santomean society. STP has always been very
peaceful and, from this perspective, a highly positive role model for the
continent. Unlike other emerging or existing African petro-states, STP did
not experience violent internal conflict (like Sudan or Chad), it did not have
a history of mass murder and internal repression (like Equatorial Guinea),
and it did not witness any ethnic or religious clashes (like Nigeria). Despite
the very peaceful political environment, STP has experienced two military
coups – in 1995 and 2003 – but these were mostly bloodless events and were
quickly resolved in a very peaceful manner ending with the restoration of
civilian rule in both cases110. An oil boom is thus unlikely to trigger any
violent conflicts as elsewhere in Africa, yet it may breed further corruption
and may introduce further economic distortions.



This article has demonstrated STP’s unacknowledged double
transformation away from domination by cocoa exports through unviability
towards the imminent emergence of a petro-state. The cocoa sector is still a
very important provider of local employment, but it is of little importance to
the country’s balance of payments and the state treasury. The basis of STP’s
political economy has firmly shifted towards overwhelming dependence on
external resources.
While we were able to show important transformations at work, we also
acknowledge the strength of continuity in the fabric of STP’s society. As was
the case with the country’s previous commodity booms, the imminent
emergence of an oil sector and the resulting exponential increase in GDP
will, once again, most likely be of disproportionate benefit to a small elite.
Indeed, even the initial process of granting concessions has resulted in a
significant slice of future petroleum revenues being ceded to a Nigerian
consortium with close links to that country’s government, and key figures in
the Santomean establishment. This reflects both the continued influence of a
few key families and factions and the persistence of a large «uncaptured»
independent peasantry.






Footnotes

34. T. HODGES & M. NEWITT, São Tomé and Príncipe…, op. cit. : 142.
35. Platt's Oilgram News, 22 June 1990.
36. Platt's Oilgram News, 9 July 1997 and 30 May 2000.
37. Oil and Gas Journal, 29 June 1998; Platt's Oilgram News, 9 July 1997.
38. Business Wire, 29 July 1998.
39. Energy Alert, 24 August 1998; Platt's Oilgram News, 21 August 1998.
40. In late 2000, Schlumberger's Geco-Prakla and Baker Hughes' Western Geophysical merged
into WesternGeco, with Schlumberger owning 70% of the new company (Hart's Deepwater
International, 4 December 2000).
41. Personal interview with a senior government official, São Tomé (March 2002). Under the
new agreement the now merged ExxonMobil will have guaranteed options to rights in only
two blocks in the JDZ – 40% in one and 15% in another. The company’s share of the
signature bonus to be paid is now expected to be vastly higher as bonuses will be
determined by competition among bidders when the first licensing round takes place in the
JDZ.
42. Energy Alert, 24 August 1998; Platt's Oilgram News, 21 August 1998.
43. The lengthy negotiations between Nigeria and STP had already led to sizable expenditure
overruns which contributed to STP’s government budget deficit. See IMF, «São Tomé and
Príncipe…», op. cit. : 44-45.
44. Personal interview with Miguel Trovoada, São Tomé (March 2002).
45. Personal interview with a senior PGS staff, London (April 2002).
46. World News Connection, 26 April 2001; African Business, 1 June 2002.
47. PR Newswire, 17 December 1997; Business Wire, 5 October 1998. ERHC also claims to have
helped to chart STP’s territorial waters and to file demarcation paperwork with the United
Nations and have paid the government's legal fees, travel expenses for Santomean leaders
and other costs, Los Angeles Times, 24 May 2003.
48. On STP-Angolan relations until the late 1990s, see A. NASCIMENTO, «Relacoes entre Angola
e São Tomé e Príncipe na Época Contemporanea: esboço de problematização em torno da
transferencia de mão-de-obra e das relações políticas», in Actas do II Seminário Internacional
sobre a História de Angola – Construindo o Passado Angolano: as fontes e a sua interpretação,
Lisbon, Comissão Nacional para as Comemorações dos Descobrimentos Portugueses, 2000.
During the MLSTP one-party rule 1975-1991, Angola provided economic support to STP
and some Angolan troops were based in the country. Some of the key foreign businessmen
active in STP came to the country on the back of strong political backing from Luanda –
including Chris Hellinger and Mello Xavier. While Angolan influence continued after 1991,
the Angolan support was more limited, not least because of Miguel Trovoada’s association
with individuals who allegedly had links to the UNITA rebels in Angola.
49. Personal interview with Miguel Trovoada, São Tomé (March 2002).
50. Dow Jones International News, 9 May 2002; Weekly Petroleum Argus, 10 June 2002.
51. The Angolans still have business interests in STP. In 1998, Sonangol bought a 40% share in
the Santomean state fuel distribution company Empresa Nacional de Combustíveis
(ENCO). This followed a pattern of Sonangol’s foreign expansion in the area of oil
marketing (as opposed to oil exploration and production). Sonangol’s marketing arm
Sonangol Distribution was involved in other countries including Congo-Brazzaville and
Portugal.
52. Business Wire, 4 May 2001.
53. This included data previously collected by the Island Oil Exploration, Geco/Pracla and
Veritas (which conducted seismic studies as part of prior Nigerian oil concessions of what
constitutes the JDZ today). Personal interview with a senior PGS staff, London (April 2002).
54. Personal interview with a senior PGS staff, London (April 2002).
55. IMF, «São Tomé and Príncipe…», op. cit. : 22; personal communications with a senior staff of
an inter-governmental organization in Washington DC (September 2002).
56. Geoffrey Tirman and ERHC openly accused Carlos Bragança Gomes (ex-president of
STPetro) of demanding bribes in return for advancing mutual relations and for threatening
to jeopardize relations when the reply was negative, though it appears that mutual
animosity ran deeper. Gomes replied to the effect that he tried to protect STP interests and
was pursued by private interests.
57. Form 10-KSB/A, submitted by ERHC to the US Security and Exchange Commission,
Commission file n° 000-17325; also personal interview with Miguel Trovoada, São Tomé
(March 2002).
58. Personal interview with a senior PGS staff, London (April 2002). The seismic studies of
Geco-Prakla (now WesternGeco) were apparently conducted on a non-exclusive basis or, in
other words, they were not done for the exclusive benefit of either the STP
government/ERHC or Mobil. The company was hoping to sell the seismic data to other oil
companies interested in the area, which is a well-established practice in the oil industry. In
the meantime, the STP government had contracted PGS to market seismic data, including
the WesternGeco data. As a consequence, this would deprive WesternGeco of an
anticipated source of revenue.
59. The IMF projections simply assume the discovery of a medium-sized oil reservoir of about
800 million barrels of oil, with production start-up in 2006. The figures are much less
reliable than the estimates of the oil consultants Wood Macenzie for Gabon and the other
countries, which are based on actual known discoveries and estimated development times
for each oil field. Therefore, the IMF figures may somewhat inflate likely STP production
levels vis-à-vis other neighbouring countries and we need to treat the IMF figures with
considerable caution.
60. For a review, see M. L. ROSS, «The Political Economy of the Resource Curse», World Politics,
LI (2), 1999.
61. J.D. SACHS & A. M. WARNER, Natural Resource Abundance and Economic Growth, Cambridge,
Massachusetts, Harvard Institute for International Development, Development Discussion
Paper n° 517, October 1995. See also A. GELB et al., Oil Windfalls: Blessing or Curse, New
York, Oxford University Press, 1988.
62. See e.g. J.D. SACHS & A. M. WARNER, Natural Resource Abundance…, op. cit. The arguments
linking the mineral resources wealth with poor economic growth have also been analysed
for specific African oil producers. See e.g. N.C. BENJAMIN, S. DEVARAJAN & R.J. WEINER,
«The "Dutch" Disease in a Developing Country – Oil Reserves in Cameroon», Journal of
Development Economics, 30, 1, 1989; and R. M. AUTY, ‘Internal Constraints on Prudent Oil
Windfall Deployment for Resource-based Industrialization: Nigeria and Cameroon’,
Geoforum, XIX (2), 1988.
63. I. DE SOYSA, «The Resource Curse: Are Civil Wars Driven by Rapacity or Paucity», in
M. BERDAL & D.M. MALONE (eds), Greed & Grievance – Economic Agendas in Civil Wars,
Boulder, Lynne Rienner, 2000.
64. S. KYLE, «Dutch Disease in São Tomé e Príncipe: Policy Options for the Coming Oil Boom»,
Working Paper at the Department of Applied Economics and Management, Cornell
University, New York, January 2002; IMF, «São Tomé and Príncipe…», op. cit. : 16.
65. Business Wire, Houston, 16 January 2002.
66. IMF, «São Tomé and Príncipe…», op. cit.: 10.
67. Platt's Oilgram News, 30 May 2000. The company's stock plummeted from a high of more
than $3.50/share to less than $0.01 in 2000. According to Platt's Oilgram News (26 May 2000),
ERHC was delisted after new management refused to submit an annual report in violation
of the US Security and Exchange Commission (SEC) rules while management may also
have been under SEC investigation.
68. Platt's Oilgram News, 24 July 1998.
69. Political influence is subjective, relative and unstable. But APS Review Oil Market Trends
(20 August 2001) estimated the five top decision makers in petroleum policy in the
following order: President Olusegun Obasanjo, his top energy advisor Rilwanu Lukman,
special presidential assistant on petroleum affairs Funsho Kupolokun, Vice President Atiku
Abubakar and Jackson Gaius-Obaseki, Group Managing Director of the Nigerian National
Petroleum Corporation (NNPC). Of course, this can only serve as a rough guide to Nigerian
petroleum politics but it is nonetheless an instructive list.
70. Newswatch, Lagos, 25 February 2002
71. After the sudden collapse of a planned merger between PGS and the Texas-based Veritas
DGC Inc. in late July 2002, the PGS shares dived by 75% in one day and the company has
been in serious financial trouble since (The Oil Daily, 6 August 2002; Platts Oilgram News,
1 August 2002).
72 The father of Gbenga Obasanjo's wife also chaired the Nigerian affiliate of PGS. Economist
Intelligence Unit, ‘EIU Country Report – July 2002’ (London, 2002), p.34; Energy Compass,
27 July 2001.
73. Associated Press, 19 February 2002. The contract with PGS was secret and the existence of the
option for obtaining three oil blocks was only revealed by President Menezes during the
2002 election campaign to the displeasure of PGS managers.
74. Personal interview with a senior PGS staff, London (April 2002).
75. Also known as Christian Rippert, Hellinger has had good relations with the Angolan and
the Santomean state elites as well as President Omar Bongo of Gabon. During the Cold War,
he seemed able to retain connections with key parties in rival camps despite his links with
South African military intelligence. Hellinger made money in air transport in Africa and in
Angolan diamonds, notably by «creating» the Lucapa diamond mine in Angola in the
1980s, paving the way for a revival in diamond production in government-held areas in that
country, although the Sociedade Mineira do Lucapa subsequently passed out of his hands.
In addition, he held an Angolan government contract for cleaning the streets of Luanda
with Filipino workers. Hellinger’s current interests outside STP include the Chamonix wine
farm in Franschoek (he has recently talked President Omar Bongo of Gabon into buying a
property nearby). He also serves as the Santomean Honorary Consul in Cape Town. Given
his political and economic influence in STP, he was previously labelled «the king of São
Tomé» (Weekly Mail and Guardian, 16 August 1996; Africa Intelligence, 26 April 2001; Business
Wire, 18 February 1999; telephone interview with Chris Hellinger, June 2002; G. SEIBERT,
Comrades, Clients and Cousins…, op. cit. : 160-162). However, Hellinger’s influence in the
Santomean political arena has decreased in recent years as a result of shifts in political
configurations and as a result of the entry of new actors with much larger financial muscle,
notably the Nigerians and the Taiwanese.
76. Telephone interview with Chris Hellinger (June 2002).
77. Telephone interview with Chris Hellinger (June 2002).
78. Oil and Gas Journal, 12 April 1999; Africa Intelligence, 18 March 1999; Business Wire, 11 March
1999.
79. Telephone interview with Chris Hellinger (June 2002).
80. WADCO was headed by Willem Steenkamp, former South African ambassador to Gabon.
81. S. KYLE, «Dutch Disease in São Tomé e Príncipe…», op. cit. : 21-22.
82. Own translation from French. Personal interview with Miguel Trovoada, São Tomé (March
2002).
83. According to Nnamdi Nnoruke, Offor «did assist them financially and otherwise» though
he did not specify. Interview in Newswatch, Lagos, 25 February 2002.
84. Form 10-KSB/A, submitted by ERHC to the US Security and Exchange Commission,
Commission file n° 000-17325.
85. Associated Press Newswires, 19 February 2002.
86. IMF, «São Tomé and Príncipe…», op. cit.: 15.
87. B.R.P. DE CARVALHO, «Food Security and Hedonic Behaviour: A Case Study of São Tomé e
Príncipe», Food Policy, XXIII (34), 1998.
88. G. SEIBERT, Comrades, Clients and Cousins…, op. cit.: 235-238; IMF, «São Tomé and
Príncipe…», op. cit.: 22. Personal interviews with staff of an inter-governmental
organization in São Tomé (March 2002).
89. G. SEIBERT, Comrades, Clients and Cousins…, op. cit.: 235.
90. For instance, Younger found that foreign aid creates resource curse effects all the same; see
S. YOUNGER, «Aid and the Dutch Disease: Macroeconomic Management When Everybody
Loves You», World Development, XX (11), 1992.
91. As early as December 1984, President Pinto da Costa asked President Omar Bongo of Gabon
to arrange a meeting between him, Miguel Trovoada and Carlos Graça, two former cabinet
members who lived in exile. Carlos Graça indeed decided to return to São Tomé in December
1987 and became prime minister in January 1988. See G. SEIBERT, Comrades, Clients and
Cousins…, op. cit. : 154. With regards to political reform, the MLSTP initially did not envisage
true democratization and the surrendering of its vanguardist pretensions. However, during a
session of the Central Committee in October 1987, various political reform measures were
introduced. The event was (in the words of Seibert) «clearly a response to the conditions
imposed by the IMF and the World Bank» and the measures were «aimed explicitly at
supplementing the structural adjustment of the economy». See G. SEIBERT, Comrades, Clients
and Cousins…, op. cit.: 168.
92. G. SEIBERT, Comrades, Clients and Cousins…, op. cit.: 171.
93. PCD-GR emerged out of the so-called Grupo de Reflexão, a gathering of former and current
government functionaries (which included two MLSTP ministers and a founder member of
the MLSTP in 1972) in December 1989. PCD-GR won 33 seats in the National Assembly, while
the MLSTP only obtained 21 seats.
94. Currently, the three main political parties are: the Movement for the Liberation of Sao Tome
et Principe/Social Democratic Party (MLSTP-PSD) led by Manuel Pinto da Costa; this party
provided the country’s first post-independence government; the Democratic Movement for
Change (MDFM) allied with the current President Menezes which has made rapid inroads
at the expense of more established parties; and the Independent Democratic Action (ADI)
dominated by followers of Miguel Trovoada. In the 2002 legislative election, the MLSTPPSD
won 24 seats, the MDFM 23 seats and the Uâ Kédadji coalition (which included the
ADI and a few other tiny parties) 8 seats. Political developments surrounding the 2002
election were detailed in the ECONOMIST INTELLIGENCE UNIT, «EIU Country Report – April
2002», op. cit.
95. Associated Press, 11 June 2001; Personal interview with a senior PGS staff, London (April
2002).
96. Africa Confidential, 8 February 2002.
97. Examples include the rift over establishing diplomatic relations with Taiwan in return for
aid and the economic free-trade zone proposed by the French Tage Financial Company (TFC)
advocated by Charles Pasqua, the French minister of the interior at the time. See G. SEIBERT,
Comrades, Clients and Cousins…, op. cit. : 208-210.
98. This was partly mirrored in the manner in which the 2003 coup was resolved, in that a hard
currency payment by the Nigerians to the coup leaders is said to have eased the way
towards a negotiated settlement. Personal communications with several unnamed sources.
99. Xinhua, 9 April 2002.

100. Little is known in public about this. But it has been reported that Rafael Branco’s two
children were among those who had received college scholarships from ERHC (Los Angeles
Times, 24 May 2003).
101. Menezes’ personal lead on this issue was quite significant, as it threatened to sideline the
Minister of Infrastructure, Natural Resources and Environment Rafael Branco, who was
nominally in charge of oil affairs. Some of the different actors approached by Menezes also
felt somewhat perplexed as they learned that they were one of many «consultants» to the
President.
102. Personal communications with a senior staff of an inter-governmental organization
(August 2002).
103. ECONOMIST INTELLIGENCE UNIT, «EIU Country Report – July 2002», op. cit. : 35; personal
communications with a senior staff of an inter-governmental organization (August 2002).
Likewise, ExxonMobil was displeased with Menezes’ statements and the company sent a
delegation to STP in July 2002 to talk with the Santomean authorities.
104. The idea of a naval base emerged in the wake of the events of 11 September 2001 in the US.
It was promoted by the African Oil Policy Initiative Group (AOPIG), whose members
include representatives from ChevronTexaco (which produces vast amounts of oil,
amongst others, in Angola and Nigeria), the US junior oil firm Vanco Energy (which
controls vast oil concessions in Africa including Equatorial Guinea, Morocco and Namibia)
and the State and Defense Department officials. Energy Compass, 28 June 2002; Personal
communications with a senior AOPIG member. President Menezes strongly supported the
creation of a naval base, not least because this would provide STP with a deepwater port
which the country lacks (and the Nigerians failed to deliver despite some promises made
in the past). However, in October 2002, the US Assistant Secretary of State for African
Affairs, Walter Kansteiner, denied reports that the US was planning to build a military
base in STP but he revealed that the US was still exploring other ways of expanding
military co-operation with STP, amongst others, by providing patrol boats to STP. BBC
News Online, 9 October 2002.
105. According to the old 2001 contract, ERHC/Chrome had the option to acquire a 15%
interest in up to two oil blocs of ERHC’s choice in the Joint Development Zone (JDZ). The
new 2003 contract gave ERHC/Chrome a 14% stake in nine especially promising oil blocks
in the JDZ. Therefore, while ERHC/Chrome will not automatically receive part of the
government’s petroleum taxation, the company will have a stake in all oil blocks in the
JDZ. From an oil company’s point of view, this is very favourable in that risk is diversified.
If you only have a stake in two oil blocks and they strike no oil, you go empty-handed.
With a stake in nine blocks, your chance of striking oil in at least some of them gives a
much better likelihood for a steady flow of future revenue.
106. Los Angeles Times, 24 May 2003.
107. P. CHABAL, «The Prospects for Democracy in Lusophone Africa», Portuguese Studies, 12,
1996.
108. G. SEIBERT, Comrades, Clients and Cousins…, op. cit.: 245.
109. Ibid.: 237.
110. On the 1995 coup, see G. SEIBERT, «São Tomé and Príncipe: Military coup as a lesson?»,
Lusotopie (Paris, Karthala) 1996. On the 2003 coup, see Gerhard Seibert’s article in the
current issue.



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