Menezes stirs hornets' nest **UPSTREAM**
A rift over oil policy has inflamed latent political rivalries in prospective Sao Tome&Principe, putting the president in a precarious position ahead of upcoming elections for the top job
President Fradique de Menezes may soon face re-election if the political turmoil in the twin-island archipelago of Sao Tome&Principe deepens. To lose a special adviser may be considered unlucky, but then to lose one's oil minister and prime minister in quick succession, just as you conclude a ground-breaking lease sale in West Africa's hottest oil patch, smacks of carelessness.
His autocratic style in pushing through six awards under a licensing process administered by a treaty provision with neighbouring Nigeria in the Joint Development Zone offended the local elite, several of whom stood to gain from alternative selections. Ministers cited disagreement over oil policy as reasons for resigning.
Labour unrest in the civil service testifies to a growing sense of frustrated expectation among a 140,000-strong population demanding quick gains from the promised oil bonanza. However, World Bank constraints prohibit sharp pay rises, despite the $160 million in signature bonuses heading for Sao Tome's coffers Sao Tomeans owe a whopping $320 million in foreign debt.
About $50 million is already on its way from the Chevron-led consortium, in which ExxonMobil holds a 25% stake, that landed Block-1 in the first round in February.
The drillbit will go down before the end of the year and observers predict Noble Energy, Devon Energy and Pioneer Natural Resources, in tandem with Texas-based ERHC Energy, will swiftly follow suit if the remaining five production sharing contracts are signed within 30 days as expected.
Signs are the 55-member parliament will also be forced back to the ballot box rather sooner than November 2006 alongside a presidential poll, mainly fielding yesterday's men to a jaundiced electorate desperately seeking new faces. New blood is thin on the ground and the parties are in disarray.
Nonetheless, "Sao Tome is a functioning democracy and we would encourage it to remain so", the US State Department stated this week. A proposed military facility on the islands, along with other measures to help shore up regional stability in the Gulf of Guinea, where the US expects to source 25% of its oil and gas in the coming years, is also "under review", according to US Defense Department officials.
It will not be an easy ride, despite the islands' ethnic, religious and cultural homogeneity. Sharp factional divisions, similar to the politics of the more restive East Caribbean states, persist and the country remains coup-prone as last year's abortive putsch, in which Menezes was restored to power through Nigerian mediation, clearly demonstrated.
Best equipped to salvage electoral sympathies is the Movement for Liberation&Social Democratic Alliance (MLSTP), which has a well-oiled machinery to fall back on but who will run for the top job remains an open question.
Menezes benefited from MLSTP malcontents along with factional support from the Independent Democratic Action Party (ADI), the party of his predecessor Miguel Trovoada. However, Menezes has effectively split the ADI, weakening his own power base.
It is understood former head of state Pinto da Costa will not stand but that former foreign affairs minister Posser da Costa, who was prime minister under Trovoada, will run. Meanwhile, Trovoada's son, Patrice, who resigned as Menezes' special advisor on petroleum, is likely to fight a spirited campaign against those he believed let him down in the JDZ debacle. Houston-based Patrice Trovoada is understood to have backed Anadarko's bid for Block-4 and opposed the five-block deal that Menezes eventually agreed to break the gridlock on the long-delayed round.
Yet to declare his interest in the race is Carlos Gomes, the current head of the Nigeria-Sao Tome Joint Development Authority and one-time point man for ERHC.
Providing subtext to the political discourse over the next few months will be the vexed question of how to proceed with licensing of the Exclusive Economic Zone, set to kick off in six months' time, against World Bank advice.
With JDZ awards barely done and dusted, the attraction of leasing acreage over which Sao Tome exercises exclusive control will be seized by politicians keen to pin down a fresh source of patronage.
Both ERHC and BVI-registered Equator Exploration are touting preferential acreage deals in the EEZ. Lawsuits have yet to fly, but it is understood the government of Sao Tome has already been served notice by lawyers acting for the Texan company that it will not compromise on rights it claims are secured by treaty.
And if that is not enough to chew on, there is fresh secessionist talk in the even more sparsely populated and socially depressed island of Principe, in which practically all JDZ/EEZ prospects are concentrated.
It is going to be acrimonious.
