Sao Tome to set up national oil firm: govt official

CAPE TOWN (Reuters) - Sao Tome and Principe, a tiny African island nation, will establish a national oil company before the end of the year to develop the island's offshore crude oil fields, a government official said on Wednesday.

Luis Prazeres, executive director of the island's regulatory body the National Petroleum Agency, said the planned oil company would partner with Angola's Sonangol to develop an economic exclusion zone offshore.

"Sao Tome is on track to establish its own national oil company by the end of the year," Prazeres told Reuters on the sidelines of an African oil conference.

Prazeres said the national oil firm would be established as per the island's petroleum laws, which state that the government needs to participate in the country's oil exploration.

"After the national oil company of Sao Tome has been set up the government is going to constitute a consortium between Sao Tome and Sonangol," Prazeres said.

"I can tell you that the steps are very fast going... There is political will from Sao Tome and Angola," he said of the countries which enjoy close cultural ties having both been colonised before by Portugal.

However, Prazeres did not provide firm timelines for the consortium to be established.

Prazeres said the island state, which has been looking for partners to extract significant crude oil reserves off its coast in the Gulf of Guinea, expected to launch its first oil block tender at the end of January or beginning February 2010.