Independent oil and commodities trader Gunvor said on Tuesday it has entered into a memorundam of understanding (MoU) with Sao Tome to build an oil storage and trading terminal.

"The Government of the Democratic Republic of Sao Tome and Principe has entered into an MoU with Gunvor Group to create an oil storage and trading terminal on the island of Sao Tome," Gunvor said in a press statement.

Independent major trading houses based in Europe are expanding their tank and trading activities.

Vitol and Trafigura have been picking up downstream assets from oil majors such as Royal Dutch Shell and Chevron over the past year.

In November last year, the small Atlantic archipelago nation sitting in Africa's Gulf of Guinea region, said commercially viable oil had been found in a block jointly explored with neighbouring Nigeria.

French oil group Total said in December it would invest $200 million in 2012 drilling an oil block in a Joint Development Zone (JDZ) between these two countries.