The Congolese government is choosing to compromise with Luanda by signing agreements of limited scope rather than going to court to assert its rights to its offshore oil resources. […]
An agreement signed on 22 December between the Democratic Republic of Congo and Angola was not in the end a major step in the revision of the Zone of Common Interest (ZIC) agreed in 2007 by the two countries. It concerns the sharing of production from just two offshore oil fields, Negage and Menonge. The fields are located in block 14 off the coast of the Congolese province of Kongo-Central and are operated by a consortium led by the US firm Chevron.
The agreement reached in December lets the two countries, via their state-owned oil companies – DRC’s Sonahydroc and Angola’s Sonangol – each acquire a 10% stake in the entity responsible for exploitation. The rest of the shares are held by Chevron’s Angolan subsidiary CABGOC (31%), the Azule joint venture between ENI and BP (20%), the Angolan companies Etu Energias, formerly known as Somoil (20%), and GALP (9%).
The production-sharing contract comes with a signing bonus of $15m, to be shared between the Congolese state and Angola, according to our sources. Kinshasa in recent weeks negotiated for the bonus to be paid in full, as Angola already received the bonus under previous contracts with Chevron for this block.
The payment is expected to be made within one month of the signing of the agreement, giving both parties time to open a bank account for this purpose.
Loss of earnings
The Congolese authorities, and in particular Hydrocarbons Minister Didier Budimbu, who negotiated the deal, hope to use the agreement as a prelude to negotiations on other blocks that they want.
Kinshasa has been trying for several years to assert its rights over its maritime territory and the oil resources it contains. This was at stake in the renegotiation of the 2007 ZIC agreement, the boundaries of which excluded it from many blocks because they did not take into account the DRC’s continental shelf.
It was only in 2009 that DRC adopted a new law on its maritime space, which took account of this provision of the Montego Bay United Nations Convention on the Law of the Sea. Despite this legislation, Kinshasa has not brought the case before the courts.
Such legal procedures are lengthy, and oil resources are by definition limited. The DRC strategy is to make small inroads before the wells run dry. But the country’s loss of revenue is considerable: $78.8bn between 2009 and 2021, according to a confidential report funded by the World Bank (AI, 22/03/23).