The government's priority is "to have these resources go to sectors that deal with the conditions of our people - health, education, fighting disease like malaria," Natural Resources Minister Rafael Branco has told the BBC.

Sao Tome and Nigeria began auctioning drilling licences for nine offshore blocks in April. Mr Branco said they hoped to sign the first contract by the end of 2003.

"If everything goes as planned, in three or four years we'll have the first oil," he said.

Learning from mistakes

Sao Tome's oil fields are managed within a Joint Development Zone (JDZ) agreed with Nigeria.

You have the benefit of taking advantage of good experience and avoiding at all costs the bad experience Rafael Branco

Sao Tome will receive 40% of the revenues from the zone, while Nigeria - already Africa's largest oil producer - will get 60%.

Mr Branco said Sao Tome had drawn up its plans for spending its oil windfall after studying what other African countries have done in similar circumstances.

"You have the benefit of taking advantage of good experience and avoiding at all costs the bad experience," he said.

"You have very good conditions to develop tourism if you can eliminate malaria, if you can upgrade the level of education and training of our people," he said.

Previously, Sao Tome's most valuable export commodity was cocoa.

Money not jobs

The government feels "great concern" that Sao Tome's people, who are mostly farmers, could neglect agriculture to focus on oil wealth, Mr Branco admitted in an interview given to the BBC at a regional oil conference in neighbouring Angola.

But he said the only way to avoid this problem was to concentrate on development, to "improve the life of people who depend on agriculture".

Offshore oil exploration is unlikely to generate many jobs for the local population, he added.

The Angola conference has attracted a large delegation of US oil firms to discuss prospects in the Gulf of Guinea, which includes the JDZ.

Analysts believe the region has substantial offshore reserves, which are attractive the US, which is hoping to decrease its reliance on imports from the Middle East.

Sao Tome has invited the US Navy to build a port from which to patrol the Gulf of Guinea.