Bloomberg the Company & Products

Bloomberg Anywhere Login

Bloomberg

Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.

Company

Financial Products

Enterprise Products

Media

Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000

Communications

Industry Products

Media Services

Follow Us

Congo’s Failure to Publish Oil Deal Breaches Law, Group Says

Don't Miss Out —
Follow us on:

Jan. 23 (Bloomberg) -- The Democratic Republic of Congo’s government breached its own regulations by failing to publish a contract for its purchase of an oil block from Israeli billionaire Dan Gertler last year, Global Witness said.

Nessergy Ltd., an oil company owned by Gertler, paid $500,000 for 95 percent of Congo’s stake in the offshore block in 2006, according to the Oil Ministry. Congo’s government paid $150 million to buy it back last year, according to le Soft, a Kinshasa-based newspaper. A Nessergy official declined to comment on the figure when contacted yesterday by phone. Oil Minister Crispin Atama did not respond to an e-mail or three phone calls when Bloomberg sought comment.

The deal “shares many similarities with a string of secret deals in Congo’s mining sector, where mining rights were bought at knockdown prices by offshore companies and then ‘flipped’ to major international firms for vast profit,” Global Witness, a London-based advocacy group, said in an e-mailed statement.

Congo’s government regulations require that contracts for any deal involving the country’s natural resources be published within 60 days of execution. In 2012, the International Monetary Fund canceled its loan program with Congo for failing to release details of a copper mining deal with Gertler.

A report by former United Nations Secretary-General Kofi Annan’s Africa Progress Panel last year said Congo lost more than $1.36 billion in revenue by selling mining assets to Gertler at prices below market value from 2010 to 2012.

Confidentiality Agreements

Gertler’s company, Fleurette Group, said in an e-mailed statement yesterday that it could not divulge the amount it received for the oil block because of confidentiality agreements with Congo and Angola, which are developing the oil field together.

The block, 14C, is located in a zone of common interest in the Atlantic Ocean, and adjoins Chevron Corp.’s block 14. In April, Atama said Angola’s state oil company, Sonangol, will pay Nessergy for ceding its rights in the project. Congo will reimburse Sonangol from future production revenue, he said.

Fleurette said in its statement that the Nessergy block increased in value since its 2006 purchase because of new oil finds in the region, higher oil prices, and the advent of the common-interest zone, which it says it helped create.

“Despite Nessergy making considerable efforts to find development partners, it has not been able to progress the development of the block for over seven years,” Fleurette said in an e-mailed response to questions today. “In order to aid the progression of the block and prevent further delay, Nessergy has agreed to hand the rights back in return for a fee to compensate it for not being able to progress development.”

Oil Code

At the time of the Nessergy deal, $500,000 was the standard licensing fee for an oil block in Congo. The country is debating a new oil code to regulate the industry, attract new investors and increase revenue. Oil and gas provided about $465 million to the state in 2011, according to data from Congo’s Extractive Industry Transparency Initiative. The Central African country produces about 25,000 barrels of oil a day.

A confidential U.S. diplomatic cable from 2009 published online by the advocacy group Wikileaks said Gertler originally bought the block in a “corrupt oil deal” with the help of Congolese officials. The sale “infuriated” Angola, which considered the blocks Angolan property, the cable said.

Gertler’s group also has the rights to two oil blocks along Congo’s eastern border with Uganda and is looking for partners to develop the sites. His companies plan on investing about $100 million to drill exploratory wells this year, a spokesman said yesterday.

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

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

Please upgrade your Browser

Your browser is out-of-date. Please download one of these excellent browsers:

Chrome, Firefox, Safari, Opera or Internet Explorer.