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Tullow faces DR Congo uncertainty



By Barry Morgan 

Tullow Oil may have to renegotiate a fresh production sharing contract for Albertine Graben Block 2 in the Democratic Republic of Congo after Oil Minister Lambert Mende Omalanga claimed it had not paid the signature bonus.

Tullow and London-based Heritage Oil had jointly bid to acquire blocks 1 and 2.

Both companies have also acquired acreage on the Ugandan side of the graben where significant oil discoveries have been made in recent months.

In July, Omalanga indicated to Upstream that President Joseph Kabila was poised to issue a decree formalising the acquisition but that did not happen.

The Oil Ministry's Director for Petroleum Projects Joseph Pili-Pili Mawezi this week said a decree for Block 1 would be issued next week but that Block 2 would be added to vacant blocks 3, 4 and 5 in an open competitive tender for interested suitors.

A senior legal official at the Kinshasa ministry told Upstream he had earlier advised Tullow that its claim to both blocks was illegal but that executives had ignored official advice.

Mawezi said he had advised Omalanga to levy a separate bonus for Block 2 but that consortium operator Tullow refused to pay.

Tullow maintained to Upstream that due process had been followed and a $500,000 sign-on fee had been paid in consideration for the blocks under a single PSC.

"Tullow has every confidence in the legal basis of its agreement under which two blocks are covered by a single negotiated contract. All proper procedures were followed and the required signature bonus paid in full," said the company.

Officials in Kinshasa privately indicated to Upstream that if it stood alone, Tullow would be advised to renegotiate terms for Block 2 and that this would likely be accepted.

Tullow holds a 48.5% operating stake in Block 1, with the remainder shared by partners Heritage and state oil company Cohydro.

Blocks 1 and 2 together span about 6500 square kilometres over onshore and offshore acreage where technical studies have been promised during the initial licence period and before a 400-kilometre 2D seismic survey

Officials in Kinshasa have indicated they are having second thoughts about the suitability of Heritage as a partner in the troubled region, given its historic association with mercenary contractors Sandline and Executive Outcomes.

Earlier this month, armed militia on the Ugandan side of Lake Albert attacked a boat operated by Heritage Oil, killing British surveyor Carl Nefdt. The incident has prompted stormy diplomatic exchanges between the two states.

Observers said the current impasse over Block 2 has less to do with commercial negotiation and much more to do with the internal politics of DR Congo in which Kinshasa is finding it hard to control eastern warlords presiding over vast unpoliced tracts of Ituri and the Great Lakes region.

Tullow blocks


Monday, 20 August, 2007, 09:25 GMT  | last updated: Monday, 20 August, 2007, 11:24 GMT

Dispute: Tullow and the government of DR Congo in Kinshasa
 

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