São Tomé and Principe, one of Africa's smallest and poorest countries, is poised to reap a windfall of up to $200m - 50 times annual average export earnings. But the prospect of new wealth has already heightened instability in the island state, where there have been frequent changes of government in recent years and concerns about corruption.

The military junta which seized power in the potentially oil-rich island state of Sao Tome and Principe last week, signed an agreement with international mediators on Wednesday to allow the reinstatement of the elected government of President Fradique de Menezes, news agencies with local correspondents reported.

Efforts are under way to hold talks with the leaders of the coup which toppled the government of the West African island state of Sao Tome and Principe on Wednesday. Rebel army officers in the tiny former Portuguese colony seized the prime minister and other cabinet members in the dawn coup, which appears to have been largely bloodless. Sao Tome and Principe, one of the world's poorest states, has offshore oilfields which are due to begin producing within the next four years.

Seismic data suggest billions of barrels of oil could lie off Sao Tome's coast near oil-rich Nigeria, Gabon and Equatorial Guinea in an increasingly important oil-producing region far from the risks of the Middle East. And that is driving an intense local struggle for power, complicated by the involvement of big outside players drawn to islands that had been getting by in quiet poverty, exporting a little cocoa and some bananas.