"We agreed that the two oil companies already operating in the area, ExxonMobil and ERHC, be allowed to exercise options in the various blocks," Saudu Balambe, a junior minister in Nigeria's foreign ministry, told journalists after a JDA meeting in the Nigerian capital this week evening.

Bidding for the nine blocs, believed to contain billions of barrels of crude oil, was formally opened in Sao Tome in October amid considerable interest from multinationals.

The Gulf of Guinea is set to become an increasingly important source of oil for the United States as it seeks to reduce dependence on the turbulent Middle East.

OPEC member Nigeria is Africa's largest oil producer and the tiny West African archipelago of Sao Tome and Principe will be the latest entrant into the sector.

Oil companies have already made several huge oil discoveries in the deep waters of the Gulf of Guinea, and 20 companies, including Royal Dutch/Shell (RD.AS: Quote, Profile, Research) (SHEL.L: Quote, Profile, Research) , ChevronTexaco (CVX.N: Quote, Profile, Research) , Total (TOTF.PA: Quote, Profile, Research) and Statoil (STL.OL: Quote, Profile, Research) , bid for JDA acreage in October.

ChevronTexaco made the biggest offer of $123 million for 100 percent of the block one licence.

But before they know if they have won anything, ExxonMobil has 30 days to take up an option on three blocks of their choice: up to a 40 percent share in one block; and up to 25 percent in two more.

Once Exxon has made its choice, Chrome Energy has 15 days to exercise its right to a share in six of the nine blocks: up to 15 percent in two blocks; up to 20 percent in two; up to 25 percent in one and up to 30 percent in one.

The two companies cannot have more than 40 percent interest in any one block, according to the terms explained by a JDA spokesman in Abuja.

The deals between ExxonMobil, Chrome and Sao Tome have been renegotiated several times and been criticised by rights groups, which argue that they give the companies undue rights over Sao Tome's sovereign wealth.

Other potential investors have also criticised the deals, which could mean they have to partner with Chrome even though the company has a limited track record in the industry.