Nigerian billionaire Arthur Eze's Oranto and Petrobras were the only bidders as São Tomé scraps oil auction

São Tomé and Príncipe has cancelled the results of its 2026 offshore licensing round after the auction drew only two bidders, Brazil's state oil company Petrobras and Oranto Petroleum, the exploration firm controlled by Nigerian billionaire Arthur Eze.

The island nation's National Petroleum Agency scrapped the process for three offshore blocks after concluding that the absence of competing bids made it impossible to establish fair market value. The government had offered unusually generous terms, including equity stakes of up to 85 percent, in an effort to attract international capital into deep-water exploration in the Gulf of Guinea.

No Western supermajor took part. ExxonMobil, Shell, TotalEnergies and Chevron all stayed away from a round that in an earlier era would have drawn competitive bidding, leaving the field to two companies already entrenched in the country's offshore sector.

A farm-down that shaped the auction

The presence of Petrobras and Oranto reflected existing ties rather than fresh interest. In April, Oranto agreed to sell a 75 percent operating stake in the adjacent Block 3 to Petrobras, cutting its own holding from 90 percent to 15 percent while the National Petroleum Agency retained 10 percent. Petrobras completed the acquisition and assumed operatorship in July.

That deal is the template for how Eze has built his business. Oranto and its sister company Atlas Petroleum International secure early-stage exploration licences across Africa, then farm down majority stakes to larger operators with the capital to drill. The model made Atlas Oranto, by acreage, the largest indigenous exploration group on the continent, with interests spanning 22 countries.

The Block 3 sale fit Petrobras's own strategy. The Brazilian company is executing a $1.3 billion international exploration mandate through its 2026-2030 business plan, aimed at replenishing reserves expected to decline after 2030. It described the São Tomé acquisition as a move into a new frontier and part of a broader return to African exploration after scaling back overseas a decade ago.

A model under pressure

The auction's collapse comes as Eze's licence portfolio has been eroding. Governments across the continent have moved to strip Oranto of blocks it acquired but never developed, citing failures to conduct seismic work, drill wells or meet financial commitments.

Senegal withdrew Atlas Oranto's offshore exploration licences in January. South Sudan declined to renew Oranto's Block B3 licence on April 30, stripping the company of a 24,000-square-kilometre concession it had secured in 2017 with a pledge to invest $500 million, a commitment the government said was never honoured. The company has also faced setbacks over blocks in Equatorial Guinea and Uganda. Eze, who is 77, travelled to Equatorial Guinea twice in 2025 in an effort to recover revoked acreage.

The pattern points to a shift in how African governments treat the acquire-and-hold approach. Blocks that sit undrilled for years are increasingly being reclaimed and returned to the market, with regulators demanding companies committed to timely execution rather than speculative positioning.

Why the majors stayed home

The absence of the supermajors reflects a wider tightening in global energy finance. Under pressure from shareholders to protect dividends and meet carbon-reduction targets, international oil companies have narrowed their spending to what the industry calls advantaged barrels, reserves that are cheap to extract, sit in stable jurisdictions with existing infrastructure and carry low-carbon extraction profiles.

Frontier deep-water exploration, which demands billions in upfront seismic and drilling costs with no guarantee of a commercial discovery, no longer fits that calculation. The São Tomé outcome underlines the point. A country offering up to 85 percent ownership still could not draw a competitive field, a signal that the risk premium attached to the region has outweighed the potential reward in the eyes of the largest players.

A lesson beyond the islands

The failure carries a warning for other African producers marketing frontier acreage. Nigeria is attempting to sell deep-water and marginal field assets to offset declining output and shore up foreign exchange, and the São Tomé result suggests favourable tax terms and high equity allowances are no longer sufficient on their own.

Investors now demand regulatory certainty, asset security and fast approvals. Analysts expect frontier states to lean increasingly on direct negotiations with state-owned companies such as Petrobras or China's CNOOC rather than open tenders. São Tomé sits within the productive Gulf of Guinea system and retains real geological promise, but unlocking it may require abandoning the auction model altogether.