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February 21st, 2011, 09:40 PM
By Katrina Manson FT.com (http://www.ft.com/cms/s/0/0bb8906a-3de0-11e0-99ac-00144feabdc0.html)
Published: February 21 2011 18:34 | Last updated: February 21 2011 18:34
A battle for the future of Africa’s oldest national park has erupted in the east of the Democratic Republic of Congo, pitting UK oil companies keen to explore in one of the world’s poorest countries against the green lobby.
FTSE-listed Soco International and AIM-listed Dominion Petroleum were granted Block 5 of the Congo’s eastern Albertine Graben last year.
Part of the block is in the Virunga national park, a world heritage site famous for its endangered mountain gorillas. The companies, stressing the gorillas are not present in their block, are eager to start exploration in the park.
But the country’s laws forbid oil exploration and production within a national park, although exceptions for scientific activities may be possible on application.
José Endundo, environment minister, is considering a request from 41 local MPs to redraw the boundaries of the park to enable the “rapid start” of oil exploration “at the heart” of the block. A delegation plans to visit the park at the start of March, he said in a letter seen by the Financial Times.
The Congo produces 28,000 barrels a day from its western shoreline, but discovery of 2.5bn barrels in neighbouring Uganda by the UK’s Tullow Oil has sparked a race for crude.
Unesco says oil activities are “inappropriate” and “not compatible” with world heritage status.
Wildlife agency WWF says Soco is acting with “total disregard” and calls the plans “pernicious”. Soco rejects the charges.
Officials at Soco, the operator of the block, have received death threats.
“If you start drilling in Virunga, your company is DEAD,” said one comment sent to the company. “This is not a warning. It’s a promise.”
Roger Cagle, Soco’s deputy chief executive, said a final report on the likely environmental effects would be complete by the end of the month, after a draft that Unesco said had “clear deficiencies”.
“If we didn’t think we could do this in an environmentally responsible way, we wouldn’t do this,” he told the FT.
“There’s no ecosystem being preserved there – drive the whole block you will find that most of it is burnt-out savanna,” he said. Dominion said it had no comment at this stage.
The savanna and wetlands, home to elephants and lions, are an “integral part” of the world heritage site, says Unesco.
A boundary change could endanger the park’s world heritage status, which has helped to attract more than $26.5m in funds over three years from donors, Guy Debonnet, a natural heritage specialist at Unesco told the FT.
The companies say the deal offers clear benefits to the government.
The confidential partnership-sharing agreement for the block, signed in 2007 and seen by the FT, requires them to pay a $2m signature bonus, another $2m bonus on first production and $5m at the 10 millionth barrel, plus an annual surface tax.
It offers a share of between 40 per cent and 60 per cent of oil profits based on a sliding scale for production, lower than the top-tier 80 per cent offered in Uganda but better than other Congo oil deals, according to analysts.
A June 2010 amendment also saw the companies agree an additional undisclosed signature bonus, thought to be $500,000, a few weeks before winning presidential ratification.
“In the context of frontier exploration this is definitely not a sweetheart deal for us at all – we’re dealing in a frontier basin with massive security issues,” said Soco’s Mr Cagle.
“If we can’t work with the support of the government or local people we’ll leave. We’re not there to be killed or to kill anyone,” he added.
Copyright The Financial Times Limited 2011
http://media.ft.com/cms/c759aa0c-3dea-11e0-99ac-00144feabdc0.gif
Published: February 21 2011 18:34 | Last updated: February 21 2011 18:34
A battle for the future of Africa’s oldest national park has erupted in the east of the Democratic Republic of Congo, pitting UK oil companies keen to explore in one of the world’s poorest countries against the green lobby.
FTSE-listed Soco International and AIM-listed Dominion Petroleum were granted Block 5 of the Congo’s eastern Albertine Graben last year.
Part of the block is in the Virunga national park, a world heritage site famous for its endangered mountain gorillas. The companies, stressing the gorillas are not present in their block, are eager to start exploration in the park.
But the country’s laws forbid oil exploration and production within a national park, although exceptions for scientific activities may be possible on application.
José Endundo, environment minister, is considering a request from 41 local MPs to redraw the boundaries of the park to enable the “rapid start” of oil exploration “at the heart” of the block. A delegation plans to visit the park at the start of March, he said in a letter seen by the Financial Times.
The Congo produces 28,000 barrels a day from its western shoreline, but discovery of 2.5bn barrels in neighbouring Uganda by the UK’s Tullow Oil has sparked a race for crude.
Unesco says oil activities are “inappropriate” and “not compatible” with world heritage status.
Wildlife agency WWF says Soco is acting with “total disregard” and calls the plans “pernicious”. Soco rejects the charges.
Officials at Soco, the operator of the block, have received death threats.
“If you start drilling in Virunga, your company is DEAD,” said one comment sent to the company. “This is not a warning. It’s a promise.”
Roger Cagle, Soco’s deputy chief executive, said a final report on the likely environmental effects would be complete by the end of the month, after a draft that Unesco said had “clear deficiencies”.
“If we didn’t think we could do this in an environmentally responsible way, we wouldn’t do this,” he told the FT.
“There’s no ecosystem being preserved there – drive the whole block you will find that most of it is burnt-out savanna,” he said. Dominion said it had no comment at this stage.
The savanna and wetlands, home to elephants and lions, are an “integral part” of the world heritage site, says Unesco.
A boundary change could endanger the park’s world heritage status, which has helped to attract more than $26.5m in funds over three years from donors, Guy Debonnet, a natural heritage specialist at Unesco told the FT.
The companies say the deal offers clear benefits to the government.
The confidential partnership-sharing agreement for the block, signed in 2007 and seen by the FT, requires them to pay a $2m signature bonus, another $2m bonus on first production and $5m at the 10 millionth barrel, plus an annual surface tax.
It offers a share of between 40 per cent and 60 per cent of oil profits based on a sliding scale for production, lower than the top-tier 80 per cent offered in Uganda but better than other Congo oil deals, according to analysts.
A June 2010 amendment also saw the companies agree an additional undisclosed signature bonus, thought to be $500,000, a few weeks before winning presidential ratification.
“In the context of frontier exploration this is definitely not a sweetheart deal for us at all – we’re dealing in a frontier basin with massive security issues,” said Soco’s Mr Cagle.
“If we can’t work with the support of the government or local people we’ll leave. We’re not there to be killed or to kill anyone,” he added.
Copyright The Financial Times Limited 2011
http://media.ft.com/cms/c759aa0c-3dea-11e0-99ac-00144feabdc0.gif