Revenues mainly from signature bonuses, no oil found yet.
São Tome and Príncipe (STP) received roughly US $60 million in oil exploration revenue between 2003 and 2013, mainly from signature bonuses. The island nation with a population of less than 200,000 has for the past decade prepared itself for oil production. So far, there has been none.
From a maritime dispute to joint development
The establishment of the Joint Development Zone (JDZ) between Nigeria and São Tomé and Príncipe in 2001 settled a dispute between the two countries, which both claimed rights to the potentially oil-rich area. The zone is managed by the Joint Development Authority (JDA).
The JDZ report includes all payments made by companies to the JDA, transfers by JDA to the governments of Nigeria and São Tomé, the legal and fiscal framework governing the JDZ, companies operating in the zone, and other information that enables the citizens of the two countries to better understand the arrangement and its current status.
The vast majority of São Tomé's oil revenues dervied from payments that were made in 2004 and 2005 by companies exploring in the JDZ the country shares with Nigeria. Only US $9 million derived from São Tomé’s own Exclusive Economic Zone (EEZ), where three companies have been searching for oil since 2011.
In addition to the revenue figures, the reports contain information about how the sector is governed.
Showing how revenue is used
The Joint Development Authority is financed by the governments of Nigeria and São Tomé and Príncipe. The total budget between 2004 and 2013 was US $117 million, of which STP's share was roughly US $47 million (40%). The budget is spent on the administration of the zone. However, since 2008 Nigeria has paid São Tome´s part of the JDA’s budget. This means that between 2008 and 2013, São Tomé has accumulated a US $21 million debt to Nigeria.
STP's US $60 million revenue from signature bonuses was deposited into the national oil account, from which a maximum of 20% of the balance can annually be transferred to the state budget. At the end of 2013, there was roughly US $10 million left in the account.
Social projects under scrutiny
Signature bonuses are not the oil industry’s only contribution to São Tomé and Príncipe. Contracts oblige oil companies to undertake social projects. Companies exploring in the Joint Development Zone have completed projects worth US $3.6 million in São Tomé and Príncipe. This includes, for example, the construction of a hospital on the island of Príncipe and providing food for the canteen of Patrice Lumumba school.
Based on consultations with local civil society the report recommends that the management and monitoring of these projects is improved, as well as communication between the JDA and civil society. These recommendations, along with others, aim to ensure the transparent governance of this nascent oil sector.