Sonangol, Cohydro of Congo Reach Agreement on Offshore Oil Block

Sonangol EP, Angola’s state oil company, and Cohydro of neighboring Democratic Republic of Congo will develop a shared oil block off the coast of the two countries, Congolese Oil Minister Crispin Atama said.

The nations each control half of the block, which is in a so-called zone of common interest that overlaps with part of Angola’s block 14 in the Atlantic Ocean, he said in an interview in Kinshasa, the Congolese capital, on April 19.

“We have signed an accord with Angola so that this block 14 will be managed by the two republics,” Atama said. “Cohydro of DRC and Sonangol from Angola will come together to decide how we can manage the block together” in the zone of common interest.

Angola and Congo have long-standing disagreements over their maritime borders and access to the lucrative oil blocks there. In 2007, the two countries agreed to put a portion of block 14’s Negage Development Area in the common interest zone.

Chevron Corp. (CVX), which has a 31 percent interest in a production-sharing contract for block 14, suspended development in that area of the block while the two countries finalized their accord, according to a supplement to the San Ramon, California-based company’s 2010 annual report.

Congo currently pumps about 25,000 barrels a day and is looking to expand output. Angola produced 1.78 million barrels a day in March, according to data compiled by Bloomberg, making it Africa’s second-biggest producer after Nigeria.

Production Sharing

Cohydro signed a production-sharing agreement in 2006 to develop the block with Nessergy Ltd., a company controlled by Israeli billionaire Dan Gertler, according to a contract published on the Mines Ministry website.

Nessergy is no longer part of the project, Atama said. He declined to say how much the company had been paid to sell its shares. A Gertler spokesman didn’t immediately respond to an e- mail requesting comment.

The two countries signed the deal with Nessergy in October, according to Sonangol’s website. In January, Atama told Bloomberg News the three parties were still working out the details.

Details of the agreement with Sonangol and Nessergy aren’t yet publicly available, even after a May 2011 decree by Congo’s government requiring that contracts for any cession, sale, or rental of the state’s natural resources be published within 60 days of execution.

Sonangol didn’t immediately respond to an e-mailed request for comment.

Atama is also on the executive committee of Congo’s Extractive Industries Transparency Initiative, which promotes public accounting of revenue from mining and oil deals to combat corruption. A new law to improve transparency and attract investment in the oil and gas industry should pass Congo’s parliament by mid-June, he said.

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

To contact the editor responsible for this story: Paul Richardson at pmrichardson@bloomberg.net

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