Equator Exploration - Sao Tome oil play

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Prosecutor says Gulf of Guinea oil deals 'seriously flawed'
AFX


LIBREVILLE (AFX) - State prosecutors in Sao Tome and Principe have found offshore oil prospecting deals the Gulf of Guinea island nation made in June were 'seriously flawed' at the country's expense.

'The procedure used to select the companies to receive awards was seriously flawed and did not meet the minimum international standards for a licensing round,' attorney general Adelino Amado Pereira said in a statement.

Since September, his office had been investigating alleged irregularities in the distribution of five offshore blocks jointly owned by the archipelago and by Nigeria, Africa's largest oil producer, on a 40-60 pct basis under a treaty signed in 2001.

A US-registered Nigerian-funded company, EHRC Energy Inc, was then reported to be the main beneficiary, with shares in each block ranging from 15 to 65 pct.

The blocks were allocated in June for a total of 283 mln usd (238 mln eur).

Investigators found the award of contracts had 'worked to the financial detriment of Sao Tome and Principe' and had also been of benefit to 'many unqualified firms', according to the statement.

The findings had been sent with 'recommendations' concerning future oil exploration tenders to President Fradique de Menezes, the prime minister and the speaker of parliament.

Contacted by AFX, Pereira declined to comment on whether he would be taking legal action against anyone or to give further details of what was in the report.

In November, de Menezes told a Portuguese daily he was being investigated as part of a probe into alleged corruption, and said an unnamed US academic expert was helping the team.

Huge oil deposits have been detected in the waters off Sao Tome, off the southern coast of West Africa, since 1995 which have stirred international interest but so far the tiny archipelago of less 200,000 people and has yet to feel the results of an expected oil boom.

Some studies suggest the islands, which gained independence from Portugal in 1975, sit on between six and 11 bln barrels of crude oil.

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