Congo should review Lake Albert oil deals: group

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Democratic Republic of Congo should renegotiate the terms of its Lake Albert oil deals to avoid the “oil curse” that has fed corruption and poverty in other energy producing nations, an advocacy group said.

The vast central African country, once a major minerals producer scarred by a 1998-2003 war and ongoing rebellions that have killed millions, has attracted new investor interest after a big oil find just across the border in Uganda.

Companies, including UK’s Tullow Oil and South Africa’s Divine Inspiration Group, have signed contracts with for blocks on the Congo side of Lake Albert but have been waiting for years for the deals to be ratified.
“Urgent changes should be made to the contracts, legislation and regulatory regime covering oil,” according to the report by Platform, a London-based human rights and environmental pressure group which said it had obtained copies of the deals.

Tullow’s vice president of African business, Tim O’Hanlon, dismissed Platform’s findings but declined to give specific comments. An official at Divine could not be reached.

Platform said Congo was offering terms in the contracts that would allow the companies to reap excessive profits without enough upside for the state, and that also fail to properly address transparency, health and the environment.

The group added that Tullow’s contract appeared less favourable to the state than Divine’s.
“If recognised, Tullow’s contract will cut Congolese government revenues by over $10 billion (in comparison to the Divine contract) — a figure equivalent to the country’s entire national debt,” Platform said.

Congo officials declined to comment yesterday, but the government has said in the past it is considering adopting an oil code favourable to companies to encourage the development of its remote deposits.

Platform, which issued a similar report last year faulting a Tullow oil deal in Uganda, said Congo should boost royalties and revise cost recovery and production sharing terms, noting they appeared to be more favourable to companies than in similar contracts for oil development in Uganda or Iraq.

The Tullow and Divine exploration contracts, signed in 2006 and 2008 respectively, are in apparent conflict as both assert rights to Lake Albert’s Block 1.

Source: www.af.reuters.com