Sao Tome residents hope for oil riches
SAO TOME, Sao Tome and Principe - At the foot of a mud slope in a jungle of cocoa trees, a murky fluid bubbles up into a viscous stream. The swirling film atop the narrow river prompts the question that is percolating throughout this tiny West African nation: Is it a fountain of riches?
Here in Uba Budo, an isolated northern highland region where farmers eke out a living on the remains of colonial-era plantations, the villagers wonder.
"I think it's oil,'' said Wilson Romel, a shirtless 18-year-old who digs up the muck with his machete and rubs the foul-smelling liquid on his arm. "Do you think the big companies will come?''
Sao Tome's 160,000 residents have been pinning their hopes on those companies. Last month they finally came, or at least bid for the chance to come, in the first public auction for the country's natural riches. Since geologists suggested seven years ago that there might be large deposits of oil beneath the waters of Sao Tome - whose two islands total just 370 square miles of land mass - the former Portuguese colony has been astir.
"Everybody here talks about black gold,'' said Jesus Monteiro, a 21-year-old farmer who lives near Villa Petroleo, as locals call the cluster of rotted plantation barracks on the hill. "Black gold is what they call it on television.''
Even with only one TV station, which is government-owned, and no daily newspapers, that sort of news travels fast.
For a country with an average annual income of only $280 a year, the possibilities are vast. Although the contracts haven't been awarded, the recent bids suggest that Sao Tome is likely to get a cash infusion of about $200 million by next spring. That's almost four times the country's current annual revenue, 80 percent of which comes from foreign aid. And that would be only from the initial signing bonuses.
If the geologists' estimates prove true, companies like Chevron Texaco - which made the largest bid of $123 million - will likely be pumping oil out of Sao Tome's waters by 2007. "We expect about $500 million per year in oil revenues after about ten years,'' said Patrice Trovoada, special oil adviser to the country's president, Fradique de Menezes.
The burning question is: What will the government do with it? Although their needs are vast, many Sao Tomeans are skeptical they'll see any benefits.
"Oil is only for the government officers,'' said Hipolito Lima, a village leader who works the fields outside Moro Peixe, a fishing village on the northern coast. Standing outside a bamboo hut with mud-caked feet and a wizened smile, he added: "And when they leave, they'll put in their relatives.''
That kind of suspicion is widespread in a country where nepotism is the norm and where many recall that the government has a bad track record for spending.
Even government officials acknowledge that oil money isn't likely to bring such improvements anytime soon. "Expectations are too high,'' said Tome Vera Cruz, minister of natural resources and the environment.
Although many young people say they'd happily abandon the fields to work in an office for an oil company, the industry actually employs very few people. And if the experiences of Sao Tome's oil-rich African neighbors, such as Nigeria or Angola, are any guide, oil could be more likely to distort the economy and encourage conflict and corruption than be a ticket to economic development.
Menezes, a wealthy businessman turned politician, insists his country can do better.
"We will implement the best practices drawn from countries around the world. And we will go further to ensure that oil serves the people ... for this and future generations,'' he said recently at a ceremony marking the oil bids.
Sao Tome is getting a surprising amount of foreign advice on how to do just that.
Two weeks ago, a team of experts convened by economist Jeffrey D. Sachs, director of the Earth Institute at Columbia University, flew here to advise the president.
The UN Development Program and the World Bank are setting up more conferences on the topic.
To some, though, talk is cheap.
Rafael Branco, the country's former oil minister who resigned in August, said that the informal nature of the deals "creates opportunities for corruption.''
Controversy has swirled ever since speculators raised the subject of oil. In 1997, a little-known Houston company called Environmental Remediation Holding Corp. promised to pay $5 million for drilling rights. Although a tiny sum for an oil contract, it was a large amount for Sao Tome, whose total annual export earnings were then only $4 million.
Although the deal fell apart, the company renegotiated and brought in ExxonMobil, which got its own lucrative contract.
Many Sao Tomeans suspected corruption, especially after the World Bank declared the contracts unfair. So when Menezes was elected in 2001, he renegotiated the deals, quelling the conflict - until it was revealed that he'd received $100,000 from ERHC's chairman. Menezes said the money was a campaign contribution.
There's an even larger concern. In 1998, Nigeria claimed rights to a large portion of the underwater oil-containing region that Sao Tome had already claimed. Following negotiations, the two countries agreed to develop it jointly and split the future profits: 60 percent for Nigeria, and 40 percent for Sao Tome.
Negotiators say it was the best deal they could get, as Nigeria could have used the conflict to stall oil production. But many in Sao Tome remain resentful.
Indeed, the feeling that leaders are ripping off the country is thought to have been the principal motivation behind a coup attempt last July.
Still, the political intrigue hasn't dampened locals' hopes. Jesus Monteiro says that if there really is oil, it has got to bring a better life than he has now selling raw cocoa to exporters.
"If oil comes out there will have to be a lot of jobs, right?'' he asked. "It can't be bad.''