NYTimes.com Article: Coup on Tiny African Islands Felt in Texas Oil Offi

This article from NYTimes.com 
has been sent to you by tganesh@stlawu.edu.


Quasi-states in World Politics: the coup in Sao Tome is in an oil-rich island 
with whom both Nigeria and Angola have signed agreements for oil exploration 
and revenues, as have Exxon and other oil sisters or monsters.  Ganesh.

tganesh@stlawu.edu

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Coup on Tiny African Islands Felt in Texas Oil Offices

July 19, 2003
 By SIMON ROMERO 




 

HOUSTON, July 18 - A coup this week in the West African
island nation of São Tomé and Príncipe is reverberating in
the corporate suites of the energy industry here, oil
company executives said today. Officials from several
companies said they were anxiously monitoring events on the
potentially oil-rich archipelago, a former Portuguese
colony on the Equator in the Gulf of Guinea. 

Exxon Mobil of Irving, Tex., the world's largest oil
company, and Chrome Energy, a small Houston-based oil and
gas company controlled by Nigerian investors, have secured
options for oil exploration in the waters off São Tomé, an
area just south of oil-rich Nigeria that geologists
estimate could hold up to six billion barrels of reserves. 

ChevronTexaco, Royal Dutch/Shell and TotalFinaElf are
among the other big oil companies that have shown interest
in bidding for licenses to explore other areas in auctions
scheduled for October. This interest has sent expectations
soaring in São Tomé and Príncipe, ae two-island country of
1,000 square miles and 160,000 people where the main export
crop is cocoa and the average annual income is $280. 

"Oil has created dreams of grandeur for a tiny place that
has been on the margins of global affairs for many years,"
said Gerhard Seibert, an authority on São Tomé at the
Institute of Tropical Scientific Investigation in Lisbon.
"The army and the political and business elites sense
something coming and want a part of it." 

American and European companies are not the only potential
investors in São Tomé's nascent oil industry. Nigeria has a
treaty with São Tomé establishing a joint development zone
in waters off both countries, allowing 60 percent of the
revenue from the area to go to Nigeria. And Sonangol,
Angola's state-controlled oil company, has reached a
preliminary agreement to train São Toméan oil officials and
invest in future projects. 

It remains to be seen how the coup leader, Maj. Fernando
Pereira, will treat existing agreements. He agreed to talks
today with representatives from the United States, the
Community of Portuguese Speaking Countries and Nigeria, in
one of the first indications that tensions could ease. 

Still, most cabinet members, including the oil minister,
Rafael Branco, were being held captive today, adding to
uncertainty over the effect the coup may have on oil
exploration. The coup has already affected São Tomé's
fragile economy: The World Bank said this week that it
would suspend all aid to the nation as long as the coup
leaders remained in power. 

"Our contracts are with the government of São Tomé, so
we're assuming that they will be honored no matter what
takes place," said John Coleman, director of investor
relations at Chrome, a publicly traded company whose formal
name is Environmental Remediation Holdings Corporation.
But, he also said, "It's too early to tell what's going to
happen." 

Marcia Zilensky, a spokeswoman in Houston for Exxon Mobil,
said the company was "closely following the situation like
everybody else." Exxon Mobil has yet to start operations in
São Tomé. 

No oil is expected to be extracted from São Tomé until 2007
or 2008, but the country has nonetheless become a
international flash point, leading experts on West Africa
to speculate it was only a matter of time before jostling
for power ahead of the oil rush would evolve into political
instability. Revenue from licensing agreements alone could
reach $200 million in the next two years, an amount about
four times the size of the national budget. 

"São Tomé is a microstate with limited capacity to absorb a
big influx of cash," said Stephen Harrison, director of the
Africa program at the Center for Strategic and
International Studies in Washington. "It's also in a
neighborhood with two very muscular players, Angola and
Nigeria, opening the door for runaway competition for its
resources." 

President Fradique de Menezes of São Tomé was in the
Nigerian capital, Abuja, when Major Pereira led the
apparently bloodless putsch on Wednesday. He accused the
mutinous troops of being influenced by "the smell of oil."
He has remained in Nigeria. 

James Burkhard, an Africa analyst at Cambridge Energy
Research Associates, said investors were expecting the coup
to collapse in the face of international pressure much in
the way a similar power grab in 1995 dissipated after
Angola stepped in to mediate between parties. 

"The age of oil is upon São Tomé, so some level of friction
is to be expected," he said. 



http://www.nytimes.com/2003/07/19/business/worldbusiness/19OIL.html?ex=1059666905&ei=1&en=77126c95c1388781


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