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 OilVoice.com:

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

Tags: romantic thriller, Congo, blood diamonds

U.S. Cries for African Oil

Americans spend so much time fixated on oil in the Middle East that they generally pay little or no attention to sub-Saharan Africa, which supplies almost as much black gold to the U.S. as the Persian Gulf States. It’s also a region with just as much (if not more) danger of unexpected supply disruption. That’s largely what drove the establishment of AFRICOM, the new U.S. military administrative headquarters (one of six regional HQs worldwide) devoted solely to military relations with 53 African countries.

To put the region in perspective, sub-Saharan Africa accounted for nearly 16% of U.S. daily oil imports in 2007, versus just under 18% for the Persian Gulf States and just over 18% for Canada according to the U.S. Department of Energy. On an individual country basis, here are our top five foreign suppliers and our daily purchases in thousands of barrels:

Canada 2243
Saudi Arabia 1487
Venezuela 1336
Mexico 1258
Nigeria 1131

Angola, with 507,000 barrels daily, ranks seventh, just behind Algeria. Chad, Gabon, Congo (Brazzaville), and Equatorial Guinea are petroleum suppliers to the U.S. as well, along with minor players including South Africa, Mauritania, Ivory Coast, Ghana, and the Democratic Republic of Congo (Kinshasa).

Nigeria is particularly vulnerable to disruption. Rebel groups opposed to President Umaru Yar'Adua have repeatedly destroyed oil pumping stations, pipelines, and other distribution facilities. The bold Movement for the Emancipation of the Niger Delta has sent militants in boats through heavy seas to attack the Bonga oil field more than 65 miles from land, temporarily shutting production of more than 200,000 barrels per day.

It is not just rebel groups that threaten the Nigerian supply, either. White-collar oil workers threatened to strike after talks between U.S. energy giant Chevron Corp. and the country's white-collar oil industry workers broke down recently. A walkout was averted, but the issues remain.

The other major situation the U.S. faces with its African oil supply is competition, especially from China. The Angolans supplied almost as much oil (465,000 barrels daily) to China as they did to the U.S. in 2007. That number will almost certainly go up. The Council on Foreign Relations points out

Beijing secured a major stake in future oil production in 2004 with a $2 billion package of loans and aid that includes funds for Chinese companies to build railroads, schools, roads, hospitals, bridges, and offices; lay a fiber-optic network; and train Angolan telecommunications workers.

Angolan President José Eduardo dos Santos received his degree from the Azerbaijan Oil and Chemistry Institute in the old USSR and served as his party’s (MPLA) representative to China shortly before becoming President. The U.S. has been able to deal with him, but he’s no particular friend. After his 29 years in office during which Angola has sunk to one of the world’s poorest and least-developed countries despite almost limitless oil, diamonds, and other resources, there’s no guarantee that the situation in the country will remain stable enough to assure the U.S. of continued supply.

With two of the top seven U.S. oil suppliers vulnerable to supply disruptions at any moment, is it any wonder that the American military presence in Africa is slated for the major expansion?

Dave Donelson, author of Heart of Diamonds

Tags: romantic thriller, Congo, blood diamonds