Thursday, August 7, 2008

Oil Toil and Trouble in DRC

Petroleum is about to join gold, uranium, cobalt, copper, coltan, and diamonds as a major source of wealth—and probably trouble—for the Democratic Republic of Congo (DRC). While I was in Uganda last year researching Heart of Diamonds, a spat over oil sparked military actions on the border shared by the two countries around Lake Edward, where major oil deposits have been found. Earlier this year, civil unrest percolated on the other side of the country in Bas-Congo, where other oil development projects are underway.

The Congo’s potential oil reserves aren’t really known, although expectations are high. Numerous exploration projects have been carried out and contracts for development are being let. A trickle of petroleum is flowing in several locations, but more will come as the projects expand. DRC Minister for Hydrocarbons Lambert Mende Omalang says that oil revenue currently represents more than 25 percent of government budget income. This figure could increase following the discovery of new oil blocks in the central basin in northwestern province of Equator, in the western region of Bandundu, as well as in the eastern region of Ituri.

Here are a few current and announced projects gleaned from industry source

Dominion Petroleum has teamed with partners SOCO International PLC (SOCO) and State Oil Company Congolaise des Hydrocarbures (COHYDRO) in a Production Sharing Agreement (PSA) covering exclusive rights to explore for petroleum in eastern DRC next to the border with Uganda. The area is known as Block 5 and incorporates 7,105 sq km of land and lake areas around Lake Edward. It adjoins a region in Uganda where Dominion has carried out exploration activity as operator since July 2007. Both Blocks are part of the Albertine Rift system of sedimentary basins where significant oil discoveries were made in 2006 and 2007.

The most significant region, though is the sizeable sedimentary basin off the western coast that contains all the oil fields of Congo-Brazzaville, Cabinda, DRC, and north-western mainland Angola, an area that’s presumed to have over a billion barrels of oil.

SOCO also has received a Presidential Decree (the final regulatory hurdle) to begin work in the Nganzi Block in the DRC. The Nganzi Block, where there had been little previous activity before 2006, comprises an area of approximately 800 sq km on the eastern flank of the prolific coastal basin. Acquisition of oil is expected to commence this year.

An aeromagnetic and gravity survey has been mounted by EnerGulf of its Lotshi Block, a concession in the DRC. The survey is designed to identify and map structural trends and leads of the Congo coastal basin. The Lotshi Block covers approx 475 sq km in the offshore coastal basin of the western DRC. It is contiguous to the highly productive Cabinda area of Angola. EnerGulf is the operator of the block.

Surestream Petroleum, a private exploration and production company founded by Moustapha Niasse (twice Prime Minister of Senegal) has been looking for a strategic partner for its working interest in the Ndunda Block, which covers an area of approximately 932 square kilometers located in the narrow coastal strip of the Congo River estuary, sandwiched between mainland Angola and Cabinda.

Two American companies, Chevron and PerencoRep, are working in the coastal city of Muanda in the western region of Bas-Congo, bordering the Atlantic Ocean.

Dave Donelson, author of Heart of Diamonds

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