Congo strips Tullow of oil block rights

By Vision Reporter

Democratic Republic of Congo has stripped British energy firm Tullow of its rights to develop two oil blocks on Lake Albert, according to documents released on Thursday.

LONDON

Democratic Republic of Congo has stripped British energy firm Tullow of its rights to develop two oil blocks on Lake Albert, according to documents released on Thursday.
Presidential decrees awarded little-known energy firms Caprikat and Foxwhelp, both registered in the British Virgin Islands, development rights to Block 1 and Block 2 on the lake, which straddles the Congo-Uganda frontier.
The blocks had previously been awarded to Tullow in a 2006 accord in which the company paid a $500,000 signing bonus, and South Africa’s Divine Inspiration Group also claims rights to Block 1 after a 2008 deal in which it paid $2.5m.
“The award of these licences to an unknown British Virgin Islands registered company does nothing to help Africa build any sort of reputation for transparency,” Tullow said in an email statement.
“We are reviewing our options but have no doubt about the legal validity of our claims to these blocks,” it said.
Congo’s director of projects at the Ministry of Mines confirmed the awards. ‘It’s true, exactly,” he said.
The vast central African state, once a major minerals producer but scarred by a 1998-2003 war and ongoing rebellions that killed millions, has attracted a flurry of investor interest after a big oil find on the Ugandan side of Lake Albert.
Tullow holds a development deal on the Ugandan side of the lake and had been hoping to join them with the Congolese blocks.
The Ministry of Mines is seeking a $6m signature bonus from Caprikat and Foxwhelp for the awards, according to a letter dated June 10.
Land-based Block 3 goes to SacOil, a South African consortium in which Divine and Encha Group each have a 50% share and which had signed an accord in 2007, according to the documents.
“We’re looking at investing a total of $100m over the next four years,” Andrea Brown, director of SacOil, told Reuters.
“We will start immediately.” Another company, Polar Petroleum DRC, registered in Congo in April, is seeking a memorandum of understanding for Block 4.
Meanwhile, oil prices fell on Thursday for a third day to around $76 a barrel after a jump in US crude oil inventories outweighed the US Federal Reserve’s decision to keep interest rates near zero.
Prices pared initial losses after a batch of broadly positive macroeconomic data on the US and European economies lifted hopes for fuel demand growth.
US crude for August fell 43 cents to $75.92 a barrel after earlier sinking to $75.55.
Prices bounced back after data showed the number of U.S. workers filling new applications for unemployment insurance fell more than expected and euro zone industrial orders rose at their fastest pace in 10 years. Brent futures were down 32 cents at $75.95.
“Monetary policy by the Fed and a somewhat weaker dollar are not fully balancing out the weakness in oil demand in the US,” said Eugen Weinberg of Commerzbank, citing high US crude oil stocks.
Low interest rates are generally supportive for oil prices as cheaper borrowing costs tend to stoke oil consumption.
But the rate decision was also accompanied by bearish remarks that the US economic recovery is faltering, affecting demand for fuel.
Reuters

Congo strips Tullow of oil block rights