OIL INTERESTS MAY FIGURE IN SAO TOME COUP
by Joe Shea
American Reporter Correspondent
BRADENTON, Fla., July 16, 2003 -- The tiny nation of Sao Tome and Principe - the smallest, poorest and most peaceful democracy in Africa - fell victim to a sudden military coup in the hours before dawn Wednesday, and there is little doubt that oil politics are the cause. San Tome's President Fradique de Menezes was in Nigeria on a "private visit" when the coup took place, according to Nigerian officials who strongly condemned the coup.
Nigerians have been accused in the past of meddling in Sao Tome's affairs, and it is a partner and rival of Sao Tome in the development of offshore oil resources in the Gulf of Guinea that are estimated to contain some 11 billion barrels of oil. Nigeria "unequivocally condemns" the coup, a spokesman said, however, as do the 52-nation Africa Union, the United States, Britain and Portugal and other nations around the globe.
Noting that Menezes was in Nigeria, a U.S. State Dept. official told The American Reporter Wednesday afternoon that "We don't know if Nigeria is involved or not." Questioned further, he said he meant that he did not know what steps Nigeria was taking with respect to the coup.
After Nigeria issued a strong condemnation of the takeover, Reuters reported that Nigerian President Olusegun Obasanjo spoke with coup leader Major Fernando Pereira by telephone and demanded the release of Sao Tome government officials who are being held by coup leaders.
U.S. Ambassador to Gabon Kenneth Moorefield was on a visit to the country when the coup occurred, the State Dept. official said, and reported that all 25 Americans in the country were unharmed. They included about eight U.S. officials, including four from the Voice of America and four from the U.S. Ambassador's staff at the U.S. Embassy in Libreville, Gabon, whose portfolio includes the two-island nation of 160,000 people.
"Ambassador Moorefield was there when this occurred. Via himself and news media reports, what we know now is that Prime Minister Neves and other government officials were put under arrest at about 3 a.m.," the State Dept. spokesman said. Sao Tome and Principe is about six hours ahead of U.S. Eastern Standard Time.
"We deplore this action and strongly urge those involved to release the government officials," the Dept. of State spokesman said.
"The United States is going to review its aid to Sao Tome and that will be undertaken in the next week," he said. "The United States cannot sanction" the overthrow of a democratically elected government, he added, but said there was little likelihood at present of U.S. military intervention to end the coup.
According to RDP-Africa, an African-based Portuguese radio network, and Internet sources, the coup today was mounted by a group of former military officers. One of the reports identified the group as the "Buffalo Battalion," led by Major Fernando Manuel Pereira, also known as "Cobo," whom the the BBC said is the head of the nation's Military Training Center. The island nation's army consists of just 900 soldiers.
Pereira, in a statement reported by Reuters, said the coup came after "complaints" by the military that they had not been paid, and was intended to alleviate hunger and poverty that are rampannt in the nation, where the annual per capita income of $280 is the lowest in Africa. The country's principal exports are cocoa and bananas, but it relies heavily on foreign aid from many countries; its largest donor is Taiwan. A military coup in 1995 lasted just a week, and was mounted principally to get back pay for soldiers.
Pereira's organization has named itself the Military Front of National Salvation and said it officially took power at 6 a.m. local time, or around midnight in New York. A purported photo of Cobo on the Internet shows a large, heavy-set black man in military fatigues and a round, sad face. There is no indication when the photo was taken.
Prime Minister Maria des Neves was in Sao Tome's Central Hospital with symptoms of a mild heart attack, officials told Reuters.
Military garrisons were reportedly attacked with automatic rifles and grenades at about 3 a.m. in the morning, and rebels took the prime minister and head of parliament into custody. The rebels also reportedly took control of the nation's radio and television stations, but were otherwise silent as to their intentions, according to the Portuguese news service Lusa. There were no news reports from the sister island of Principe.
Coming in the wake of President George W. Bush's five-day visit to the continent last week and news reports suggesting that each of the 170,000 citizens of Sao Tome and Principe could soon be made a millionaire by oil royalties, the fall of the Sao Tome government and its possible consequences for oil exploration in the region are enormous for both its residents and the region.
Sao Tome and Principe, known as STP, is located in the Gulf of Guinea about 180 miles off Gabon on the coast of West Africa. Sao Tome is just 1,001 square miles, or about five times the size of Washington, D.C. The nation won its independence from Portugal in 1975 and celebrated its 28th anniversary of independence on July 12. Its persistence as a young democracy - it first held free elections in 1991 - has long been thought to be precarious. Its survival has been due to the islands' distance from the African mainland, many say.
Meanwhile, the potential for oil wealth has ignited a scramble for political influence throughout the region.
The Gulf of Guinea has been targeted as a major resource by many major oil producers, including Royal Dutch Shell, ChevronTexaco, ExxonMobil and France's Elf Aquitaine. The topic was on the agenda when Bush met with Nigerian leadership last Friday to discuss the possibility of Nigeria leaving OPEC, where it is the only African nation with membership. Bush had also met with the Sao Tome leader during the trip.
One oil exploration firm with extensive rights in the so-called Joint Development Authority and Exclusive Economic Zone, the Houston-based, Nigerian-owned Environmental Remediation Holding Corp., saw its stock drop by a third, from .30 to .20, after news of the coup circulated this morning. But within hours the stock had regained 50 percent of its loss by 2pm EST, possibly because its rights are protected by international agreements and a treaty with Nigeria.
But other producers in the region that are not so well-protected, including Houston-based Hyperdynamics, initially suffered sharp declines. As of 2:00pm EST they had recovered most of their losses; Hyperdynamics was down 0.18 for the day after several days of sharp gains. A third stock, Petroleum-Gas Services (PGOGY), saw a small gain in early trading.
There has been extensive grumbling in Sao Tome message boards on the Internet maintained by Yahoo! about the ERHC agreement. The complaints grew stronger after President de Menezes admitted receiving $100,000 in election contributions from the company, which is owned by a Nigerian millionaire, Sir Emeka Offor.
The ERHC rights were the subject of a 2,400-word article by Washington bureau staff writer Ken Silverstein in the Los Angeles Times in May that recounted the complicated history of the firm and suggested that its rights could be worth "hundreds of millions" or more when bids for its rights are published in October. And its rival, Hyperdynamics, which says it owns exclusive and unrestricted rights to exploit an area of the Gulf of of Guinea the size of the East Texas, said in a press release that while its rights are worth more, ERHC's are "worth billions."
Offor, the sole owner of ERHC's parent firm Chrome Energy Consortium, also owns extensive media, banking, insurance and retail properties in Nigeria, where he has been accused of being a manipulative "godfather" to state officials. He recently backed a former foe for governor of the Nigerian state of Anambra who was forced to flee the country after being sought in the murder of the State Bar Assn. president and his wife. Others see him, however, as a brave and persistent businessman known for straightforward dealings who is also close to the current Nigerian leadership.
Were oil companies - or a desire for oil royalties - behind the coup? That is a question that is likely to go unanswered today.
Pereira reportedly has ordered all government officials who have been detained to come before a hearing at the offices of the state police. Among those arrested, according to Reuters, was the cabinet minister in charge of the nation's oil resources, Joaquim Rafael Branco. Contributors variously bemoaned the events and called for civil disobedience and protests from citizens of Sao Tome and Principe outside the country to speak up against the coup's leaders.
According to widely published reports, U.S. dependence on OPEC oil has created a strong desire to find other sources, and as a result U.S. imports from West Africa are expected to rise from 15 percent of imports this year to as much as 25 percent of all U.S. imported oil by 2015.
Oil companies are investing some $10.5 billion in exploration platforms and other technology in the region over the past several years, and greater commitments are anticipated. Whether those investments are sufficient to spur U.S. intervention to end the coup is unknown.
Shell, Exxon Mobil and ChevronTexaco are all current or prospective partners with the Sao Tome government in that nation's Exclusive Economic Zone, a region thought to be rich in oil and that is separate from the zone to be jointly developed with Nigeria.
The writer has a substantial investment in ERHC, one of the companies named in this article.