Pledging to become a model of oil transparency in corruption-plagued West Africa, African oil giant Nigeria and neighboring Sao Tome and Principe have committed to making public regular audited accounts of a major offshore zone now under development.
The agreement, signed by Presidents Olusegun Obasanjo of Nigeria and Fradique des Menezes of Sao Tome, also requires oil companies to publish on "an individual basis" all payments made to the countries' joint development authority, managing the oil-rich zone straddling the two countries' waters in West Africa's Gulf of Guinea.
Failure to comply risks voiding any deal, the two leaders said.
The accord promises to become "a unique model for cooperation by two African countries working together for oil development with transparency," Nigeria's and Sao Tome's leaders said in a joint statement.
The oil zone covers 28,000 square kilometers (17,000 square miles), an area larger than Denmark.
In April, the two countries sold the first of nine oil fields put on auction to ChevronTexaco and ExxonMobil, receiving a signature bonus of US$123 million.
Saturday night's accord answers demands for openness in oil deals between multinationals and West African governments, with public accounting to discourage illegal payments and misuse of money for national resources.
West Africa has become one of the world's fastest growing regions, as the United States, Asia and Europe look for alternatives to Middle East oil.
Nigeria, the world's No. 7 oil exporter, regularly is listed as one of the world's most corrupt nations. London-based Global Witness has estimated that a nearby country, Equatorial Guinea, has put almost 100 percent of its oil profits into overseas accounts.
The accord stipulates regular publishing of audited accounts by the authority.
The area's joint development authority also will make the public the basis for the award of all oil interests and procurement contracts in the zone.
The Nigerian and Sao Tome leaders said the accord was in line with the Extractive Industries Transparency Initiative.
The initiative, launched in 2002 with the support of the world's leading industrial countries, seeks to increase transparency in payments made to host governments by companies in extractive industries.
It followed global concerns that corruption and mismanagement of such income had fueled poverty and conflict in countries otherwise rich in natural resources.
Nigeria, with over 70 percent of its more than 126 million people living on less than US$1 daily, is often cited as an example of a country whose citizens have become poorer despite earning huge incomes from more than four decades of oil exports.
Under the agreement between the two countries for the exploitation of the oil zone, Nigeria will receive 60 percent of the revenues while 40 percent will go to Sao Tome and Principe. The zone is estimated to hold over six billion barrels of crude.
The prospect of huge oil revenues have sometimes proved destabilizing for Sao Tome, one of the world's poorest countries with a population of 140,000 people.
In July last year des Menezes was briefly overthrown while on a trip to Nigeria by dissidents unhappy with his management of the country's oil affairs.
He was restored to power following diplomatic pressure on the dissidents from the United States, Portugal and Nigeria.