Congo Approves Oil Deal That May Encroach on World Heritage Site

KINSHASA (Capital Markets in Africa) – Former Democratic Republic of Congo President Joseph Kabilaapproved an oil contract that encroaches on a world-famous national park during his final weeks in office.

Kabila signed a decree Dec. 13 validating a production-sharing agreement between closely held South African company DIG Oil Ltd. and the state oil firm for three permits in central Congo. A large section of one licence — Block 8 — covers territory inside Salonga National Park, a Unesco World Heritage site.

The agreement, published officially last month, may enable Congo to increase crude output above the 25,000 barrels a day it produces on its Atlantic coast. It will also heighten concerns that the world’s second-largest rainforest, where Salonga is located, will be opened up to oil exploration, potentially damaging the region’s biodiversity and exacerbating climate change.

Oil exploration and production activities are forbidden in protected areas in Congo. The government has said it’s considering declassifying swathes of Salonga and Virunga National Park, another conservation site that provides sanctuary to many of the world’s 1,000 mountain gorillas. Both overlap with oil permits.

Shrinking Parks
The Oil Ministry said in June Congo’s cabinet authorized it to establish a commission to advise the government on whether it should shrink the parks to enable oil companies to operate there. About 40 percent of Salonga and 20 percent of Virunga would be affected, according to a briefing Oil Minister Aime Ngoy Mukena submitted to his colleagues last March.

The Oil Ministry and DIG originally signed an agreement on the concessions 11 years ago, but Kabila opted not to certify the contract until December. Congo’s presidency didn’t immediately respond to requests for comment.

Kabila stepped down last month after 18 years in power. Former opposition leader Felix Tshisekedi won elections that took place on Dec. 30, though he’s yet to appoint a prime minister or a cabinet, leaving it unclear whether his government will continue considering whether to allow oil exploration and production within what is presently Salonga and Virunga.

The commission hasn’t yet been put in place, according to Tony Chermani, deputy chief-of-staff to Mukena, who remains in the post until the formation of a new ministerial team. “The government which will be established will get to grips with this matter,” he said by phone Monday.

ICC Ruling
While DIG surveyed its two other licenses in 2012 and 2013, it hasn’t flown over Block 8 because of “the need for clarity on environmental impact and detailed demarcation,” Executive Director Andrea Brown said Monday in an emailed statement.

The International Chamber of Commerce in Paris made a ruling relating to the three blocks last November in favor of DIG and against Congo, Brown said, declining to provide further details. The company “wants to keep the matter confidential because making it public would not help to settle the litigation,” she said.

“The approval of another oil license over Salonga is an alarming development,” Global Witness, a London-based anti-corruption group, said in an emailed statement. Exploration could have “devastating consequences for the local communities and endangered species who live there, as well as broader environmental implications given the fundamental role it plays in climate change mitigation.”

Total Partner
Kabila signed off on another contract last February between the state and Compagnie Miniere Congolaise SPRL, or Comico, where one of the three permits infringes on Salonga. Like DIG, Comico had concluded its agreement with the Oil Ministry a decade earlier.

DIG is also a junior partner in an oil block in eastern Congo operated by Total SA and partly located inside Virunga. The French oil major pledged in 2013 not to explore in the park and to respect its current boundaries.

DIG “has respected the World Heritage site requirements of Virunga,” Brown said. “The same approach would have been taken with respect to Block 8 had exploration begun there.”

Source: Bloomberg Business News