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Congo Gives Zuma Nephew Lake Albert Tullow Oil Blocks

June 24 (Bloomberg) -- Democratic Republic of Congo awarded two of four oil blocks in the east of the country to companies owned by South African President Jacob Zuma’s nephew, nullifying a 2006 agreement for the same blocks with Tullow Oil Plc.

Caprikat Ltd. and Foxwhelp Ltd., registered in the British Virgin Islands and owned by Aurora Empowerment Systems Ltd. Chairman Khulubuse Zuma, got blocks 1 and 2 in Lake Albert, according to a presidential decree published in the June 22 edition of Congo’s Journal Officiel. Soco International Plc and Dominion Petroleum Ltd. received block 5 and SacOil Holding Ltd. of South Africa obtained block 3.

All four blocks are located in the Albertine Graben in the Western Rift Valley of East Africa on the border with Uganda, which will begin exploiting an estimated 2 billion barrels of reserves this year. Congo, which is recovering from four decades of war and dictatorship, wants to begin exploration soon.

“We are geared up to partner with the DRC government in order to fast-track the development of these highly prospective gas and oil concessions,” Zuma said in an e-mailed statement sent by Caprikat. “The contract should be viewed in the context of a developing strategic alliance between DRC and South Africa and is an important first step in the establishment of a wider industrial partnership between the two countries in the oil and gas sector.”

Disputed Blocks

Tullow signed a contract for blocks 1 and 2 in 2006. It never received a presidential decree to begin exploration. Divine Inspiration Group Ltd., a South African company that started SacOil with businessman Tiego Moseneke’s Encha Group Ltd., signed a competing contract for block 1 in 2008. Moseneke is the brother of South African Deputy Chief Justice Dikgang Moseneke.

“This is a sad day for the DRC,” Tullow said in an e-mailed statement sent by the company’s external investor relations agency. “Without transparency and the sanctity of contracts it is very difficult to attract legitimate investment that will benefit the general population rather than the few,” London-based Tullow said. “We are reviewing our options but have no doubt about the legal validity of our claims to these blocks.”

Soco received word of the presidential decree today, Antony Maris, vice president of operations, said by telephone.

“It’s an excellent addition to our portfolio,” he said. Soco already has exploration rights to the Nganzi block in western Congo, where it will begin drilling its first exploratory well next month. “We will plan drilling in year three or four” in block 5, Maris said.

‘Nominal’ Bonus

The company paid a “nominal” signing bonus for the concession, Maris said. He was uncertain of the amount.

Soco Exploration and Production DRC SPRL, a unit of the company, has a 38.25 percent in the venture. Dominion holds 46.75 percent interest through its local unit, while Congolese state oil company Cohydro holds 15 percent.

Both Tullow and Dominion own concessions on the Ugandan side of the border. Tullow will begin exploiting in Lake Albert later this year while Dominion announced the opening of its first exploratory well in neighboring Lake Edward June 22.

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

To contact the editor responsible for this story: Antony Sguazzin in Johannesburg at asguazzin@bloomberg.net

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