Only two companies, Petrobas and Oranto, submitted bids, leaving the authorities without sufficient competition to determine the true market value of the assets.
São Tomé and Príncipe rejected bids for its three offshore oil blocs after its 2026 licensing round attracted only Brazil’s Petrobras and Nigeria’s Oranto Petroleum.
The decision surprised many because the island nation of Central Africa had offered investors unusually generous terms, including up to 85 per cent ownership of the oil blocs.
Ordinarily, the government had expected generous terms to attract several competing investors, enabling them to negotiate better deals and maximise national benefits.
Disappointingly, only two companies, Petrobas and Oranto, submitted bids, leaving the authorities without sufficient competition to determine the true market value of the assets.
Petrobras is Brazil’s state-controlled energy company, with assets exceeding 180 billion dollars and major investments across Brazil’s offshore pre-salt fields and international operations.
Oranto Petroleum, on the other hand, is a privately owned Nigerian oil company founded by Nigerian businessman Arthur Eze.
The company has invested billions of dollars in oil exploration and production across more than 20 African countries.
Rather than accept what it considered inadequate competition, Sao Tome suspended the process and declined the offers.
For many observers, the decision reflected changing realities in the global oil industry rather than merely a failed licensing exercise.
Speaking to the News Agency of Nigeria (NAN) on this development, some energy experts explained why investors are staying away from fossil oil and what Nigeria should learn from it.
Some of the analysts contended that the global oil investment landscape has changed significantly over the past decade.
An Abuja-based petroleum economist, Wumi Akinola, said oil companies now invest more cautiously because exploration costs have risen while investors demand stronger financial returns.
The expert said that companies increasingly prefer projects with lower risk, stable regulations, established infrastructure, and shorter production timelines.
According to him, frontier exploration, especially deep offshore drilling, requires billions of dollars before any commercial oil is produced.
He said those huge investments have become harder to justify amid energy transition policies and increasing shareholder pressure for capital discipline.
Speaking in the same vein, another expert, Kelvin Emmanuel, said oil companies are no longer attracted by generous fiscal terms alone.
He said the companies evaluate political stability, contract certainty, operational risks and expected profitability before committing capital.
To justify his stance, Mr Emmanuel said Nigeria has awarded an estimated 500–700 oil exploration licences, but only about 120–180 advanced into producing assets after successful exploration and commercial development.
“Since 2000, the Ministry of Petroleum Resources and the Nigerian Upstream Petroleum Regulatory Commission have issued 47 refinery establishment licences to private investors.
“Of these, 31 progressed to construction, while only six eventually reached full commercial refining operations.
“Most exploration licences were utilised through seismic surveys, drilling, production or conversion into production leases, although many expired, were relinquished or remained inactive over time,” he said.
Mr Emmanuel noted that countries must provide transparent governance, competitive fiscal systems and predictable regulations to attract long-term investment.
He stressed that investors now compare opportunities across continents before unvesting scarce capital.
The Chairman of Global Energy Services, Wale Ogundipe, said the Sao Tome outcome reflects changing investment priorities.
He said many international oil companies are focusing on proven reserves rather than expensive frontier exploration.
According to him, companies prefer assets capable of generating faster returns with lower technical and commercial risks.
Speaking on the lessons Nigeria should learn from this, some experts noted that the development raised deeper economic questions beyond oil licensing.
According to them, Nigeria has earned enormous revenues from crude oil exports for more than five decades, but much of that wealth has not produced a diversified economy capable of reducing dependence on petroleum income.
They noted that manufacturing contributes less than expected despite decades of oil earnings, while agriculture remains underdeveloped relative to Nigeria’s enormous natural potential.
The experts also observed that power shortages continue to discourage industrial growth and increase production costs, while non-oil exports remain comparatively small despite repeated government diversification programmes.
