Mvelaphanda Holdings's Willcox Advising Zuma's Nephew on Congo Oil Blocks

Mvelaphanda Holdings Ltd., the South African company founded by former freedom fighter Tokyo Sexwale, is advising Khulubuse Zuma on the development of two oil blocks in eastern Congo, Chief Executive Officer Mark Willcox said.

Last month, Congo awarded blocks 1 and 2 in Lake Albert to Caprikat Ltd. and Foxwhelp Ltd. Both companies were incorporated in March in the British Virgin Islands by Zuma, South African President Jacob Zuma’s nephew.

Willcox is working as Zuma’s “strategic adviser” with a team from Mvelaphanda, Willcox said by phone from Monaco yesterday. Neither Willcox nor Mvelaphanda are shareholders in the investment, which Willcox called one of “the most interesting projects in Africa.”

The blocks are located in Albertine Graben along Congo’s border with Uganda, where an estimated 2 billion barrels of oil reserves have already been discovered. Congo, which is recovering from four decades of war and dictatorship, wants to begin exploration soon.

Mvelaphanda’s experience in African oil projects makes it an ideal adviser to Zuma, Willcox said.

“I’ve built a number of substantial investments in South Africa and Africa over the last 10 years,” Willcox said. “Khula has asked me to help him and I’m helping him.” he said. The two were together in the Congolese capital, Kinshasa, last week to discuss the project, he said.

Production Sharing

A production-sharing agreement, or PSA, signed between Zuma’s companies and Congo lists Caprikat’s address at the Johannesburg office of Ophir Energy Plc, a company part-owned by Mvelaphanda. An office registered to Sexwale, who is now South Africa’s housing minister, is listed as the Foxwhelp address.

Willcox said Zuma was moving offices at the time of the agreement and that neither Ophir, Sexwale, nor New Age Petroleum, another of Mvelaphanda’s energy companies, are involved in the deal “directly or indirectly.”

“Neither Mr. Sexwale nor his trust or any corporate entities with which he is directly or indirectly associated have or will receive any benefit from the DRC oil blocks,” Chris Vick, a special adviser to Sexwale, said in an e-mail today. Sexwale converted his business interests into blind trusts when he joined the South African Cabinet, Vick said.

Giuseppe Ciccarelli, Zuma’s technical adviser, said Mvelaphanda was among a number of South African groups that are “interested” in the project.

“This does not mean that this group is involved in ownership,” Ciccarelli said by phone from Milan yesterday. “Zuma is the owner.”

On July 22, Zuma, Ciccarelli and Congolese Oil Minister Celestin Mbuyu visited Bunia, a town near the oil blocks, to meet with community leaders and assess a number of social projects required by the PSA, Ciccarelli said. Mbuyu had his phone turned off when called for comment by Bloomberg today.

Seismic Exploration

Caprikat and Foxwhelp will begin seismic exploration and community development projects as soon as possible, Ciccarelli said. The two companies will open an office in Kinshasa and Bunia next week, he said.

Oil from the blocks will likely be shipped through a pipeline from the Ugandan side of Lake Albert through blocks controlled by London-based Tullow Oil Plc, Ciccarelli said. Tullow was given a license for Congo’s blocks 1 and 2 in 2006 and is considering legal action against Congo for giving the blocks to Zuma, the company said in an e-mail on June 24. Tullow never obtained a presidential decree to begin exploration.

Tullow vice president Tim O’Hanlon did not respond to an e- mail or voice mail requesting comment.

Caprikat and Foxwhelp have already begun discussions with Congo and Uganda about transporting the oil, Ciccarelli said.

“It is for sure in the interests of Congo and Uganda, but also for Kenya because they will have the export terminal at the port in Mombasa,” he said. “It’s in the interest of all three countries to figure out a transnational solution, and I think all three countries will work together.”

To contact the reporter on this story: Michael Kavanagh in Kinshasa at mkavanagh9@bloomberg.net.

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