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DRCONGO: Grants Total Extension to oil exploration license

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Total must develop drilling program under terms of license
Congo may hold as much as 6% of Africa’s oil reserves

BLOOMBERG – The Democratic Republic of Congo granted Total SA a one-year extension to a license allowing it to explore for oil along the Ugandan border.

Total must meet objectives including developing a drilling program before the new permit expires Jan. 26, 2019, Oil Minister Aime Ngoy Mukena said in a written response to questions. The company is also expected to produce a plan for exporting future oil production via a link to a pipeline that will connect western Uganda’s oilfields to Tanzania’s coast.

The French oil giant acquired an operating interest in Block 3 in eastern Congo in March 2011. Its license, which was supposed to end in January 2016, was initially prolonged by two years before the latest decision by the central African country’s government.

Total has a controlling stake in an oil-exploration project on the Ugandan side of the border, in partnership with China’s Cnooc Ltd. and London-based Tullow Oil Plc. In August, Standard Bank Group Ltd.’s Ugandan unit said it plans to raise $3 billion by the second half of this year for the 1,445-kilometer (898-mile) pipeline, which will ship the country’s oil via Tanzania and the Indian Ocean. The Ugandan government expects Total, Cnooc and Tullow to start pumping by 2021.

Quentin Vivant, a Total spokesman, confirmed that the company and its partners have renewed their license on Block 3 for another year. South African companies Efora Energy Ltd. and Divine Inspiration Group Ltd., and the Congolese government are also involved in the block.
‘Significant Potential’

Congo currently produces about 22,500 barrels per day from aging oil blocks on the Atlantic Ocean coast. The government had planned to boost production by issuing new onshore licenses in the center and east of the country and passing a new oil law in 2015, but progress has been slow. Congo may hold as much as 6 percent of Africa’s oil reserves and has “significant development potential,” according to a 2013 briefing note by Norton Rose Fulbright.

In February, Congo President Joseph Kabila approved a production-sharing contract between the state and Compagnie Miniere Congolaise SPRL, or Comico, for three oil blocks in the country’s Cuvette Centrale region. Sections of the permits encroach on the Salonga National Park, a UNESCO World Heritage site and the world’s second-largest rainforest.
‘Great Astonishment’

The World Wildlife Fund, which co-manages Salonga, expressed its “great astonishment and disappointment” at the government’s decision in a statement this month, warning oil exploration “represents a real danger for the exceptional flora and fauna of this ecosystem.” Scientists recently discovered the world’s largest tropical peatlands in the Cuvette Centrale and say billions of tons of carbon dioxide could be released if they are destroyed.

While there is a “principle of prohibiting upstream oil activities in protected areas,” Congolese law “authorizes, under certain conditions, exploration activities in these areas, on the basis of a decree from the prime minister,” Mukena said. If oil is discovered, “part of the said area which presents an economic interest will be able to be declassified from the rest of the area to be exploited.”

Mukena said he’s setting up a “study cell” of experts from the oil and environment ministries “to determine the problem of peat bogs in Cuvette Centrale and the exploitation of hydrocarbons in protected areas.” This group will report back to Mukena on the overlap between Comico’s blocks and Salonga.

Concerns about exploration around or within Salonga are “not justified” because other countries “exploit mineral substances including oil in parks without causing pollution,” Mukena said.

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