The Sao Tome & Principe government may have come up with a plan for managing future oil and gas revenues that quashes constituents' concerns about the potential for pillage of the country's natural resources. Fradique de Menezes, president of the West African republic, has signed a law that puts oil- and gas-related revenues into a fund held by an international custodial bank, reports Columbia University's Earth Institute. The institute and law firm Hogan & Hartson LLP worked with Sao Tome & Principe officials to develop the law, which was approved by the country's legislators as well. Annual withdrawals will be limited and use of funds will be restricted to economic and social programs within the country. A fund balance is to be used when the country's burgeoning energy industry is done. All oil-fund activity is to be made publicly available, including investments, distributions and collections. The fund is to have independent auditors. Oil-related contracts are to be public as well. And, all of this information is to be posted on the Internet. The country, which consists of two islands offshore Nigeria and whose waters include acreage that is expected to be prolific, is Africa's smallest democracy. It has a population of approximately 170,000 and an onshore land mass of about 1,000 square kilometers, or a third the size of Midland County, Texas. (For more details, see "Sao Tome & Principe," Oil and Gas Investor, July 2003.) It successfully offered offshore oil and gas concessions recently in waters shared with Nigeria, and it plans to offer concessions nearer its own shores in the future. ExxonMobil was among winning bidders. In the midst of the bidding process, however, Menezes was tossed out in a military-led coup while visiting Nigeria and was reinstated soon after, upon agreeing to develop a strong guarantee that the citizenry would see oil and gas industry profits. "All too often oil resources have been misused," says Jeffrey D. Sachs, Earth Institute director. "This law, by creating new standards of transparency and accountability, can help Sao Tome & Principe avoid the pitfalls of being an oil exporter and ensure that its potential oil resources are used for sustainable economic development benefiting the people...It will certainly become a model for others." Joseph Bell, leader of the Earth Institute team that worked with Sao Tome & Principe officials on developing the law, says, "In adopting this law, (it) has established itself as the leader in the development of transparent and responsible systems for the management of oil revenues. The law is a major step forward in the country's efforts to use its potential oil resources wisely." Menezes says in an Earth Institute press release, "Nothing will be hidden, nothing will be wasted." Arlindo Carvalho, minister of natural resources and environment, adds, "This law will permit us to manage our petroleum resources in a sustainable way so that not only the current generation, but also future generations, will benefit." -Nissa Darbonne

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