Sao Tome's prime minister, Damiao Vaz de Almeida, has resigned following contentious oil deals negotiated by the president.
The Associated Press quotes Mr. Vaz de Almeida as saying he objected to President Fradique de Menezes awarding oil exploration deals to Nigerian companies, which he said were "of doubtful credibility and inadequate technical ability."
According to the report, Mr. Vaz de Almeida was angered by the president's refusal to back the government this week during a major civil servants' strike over pay.
Mr. Vaz de Almeida had been in office for about eight months.
Two years ago, President Menezes was briefly removed from power in a bloodless coup by rebellious soldiers.
They demanded more transparency in oil contracts, following the discovery of large oil reserves.
Some information for this report provided by AP and AFP.