Congo Resources

[Berliner]

Congo to audit oil sector, first time in 10 years

http://africa.reuters.com/top/news/usnBAN323669.html

Tue 3 Jul 2007, 5:34 GMT
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By Joe Bavier

KINSHASA (Reuters) - Democratic Republic of Congo plans an audit of its oil sector to ensure the state is receiving a fair share of revenues, the first such review in at least a decade, the oil minister said on Monday.

Lambert Mende, head of the newly-created oil ministry, said the review would look mainly at whether there should be a renegotiation of the money the country's sole production partner, Perenco, deducts from profits it shares with the government to cover production costs.

Officials of Perenco, a UK-based independent exploration and production company, were not immediately available to comment.

"The charges reduce the profit from oil of which the government receives a part ... If the charges are exaggerated, that cuts into the resources available to the state," he told Reuters in an interview in Kinshasa.

Mende said Congo was negotiating with several independent auditing firms to evaluate both the declared charges and declared production figures. He said he hoped the process would begin in the coming months.

Democratic Republic of Congo produces just 25,000 barrels per day, down from 30,000 barrels a few years ago.

"We don't see much investment. And that worries us because it's because of insufficient investment that production is dropping," Mende said.

"And at the same time, they are declaring investment charges. So we'd like to see things a bit more clearly."

Congo's ministry of mines launched a similar review of existing mining concessions and partnership agreements last month, aimed at ensuring they are legal and fair.

The World Bank and government officials also believe the majority of Congo's current 156 logging titles could be cancelled during an evaluation set for later this year.

Many of the vast central African country's mining and natural resource deals were negotiated during a 1998-2003 civil war or during the three-year transitional period that followed.

A new government installed after President Joseph Kabila won the cash-strapped country's first free democratic elections in four decades last year has been reviewing the deals to ensure they are in the country's best interests.

"MAJOR POTENTIAL"

During more than three decades of rule, Congo's former dictator Mobutu Sese Seko promoted then pillaged the country's vast mineral wealth but largely ignored the oil and gas sector.

The oil ministry was created in February with the formation of the new government. Mende said he expects the sector will benefit from the same post-election boost in investor confidence that has led to a boom in industrial mining projects.

"This is an oil country, not because of our current small production, but because there is major potential," he said.

Congo is currently negotiating with neighbouring Angola to settle a dispute over maritime borders that could open up new, potentially lucrative offshore oil fields.

Additional onshore reserves remain untapped and largely unexplored in Equateur province in the north as well as under Lake Albert and Lake Tanganyika along the eastern border.

"Quite modestly, we expect nothing less than three billion barrels of reserves, and it's certainly more than that," Mende said.