NEW REPORT: A Lake of Oil – Congo’s Controversial Contracts

17 May 2010 admin

Cross posted from the PLATFORM blog, here is a new report exposing how British oil companies are making huge profits from oil in the Congo.

PLATFORM reveals Congo oil contracts that threaten resource wars and $10 billion rip-off

Tullow & British Embassy push disputed deal that could cut Congo’s revenues by $10 billion

Confidential oil contracts held by UK companies Tullow and Heritage in the Democratic Republic of Congo were leaked today, revealing the danger of economic rip-off and rights abuses in one of Africa’s most unstable countries.

The Production Sharing Agreements (PSAs) are accompanied by a legal analysis, ”A Lake of Oil – Congo’s controversial contracts compromise rights, environment & safety”, published in English and French by PLATFORM in partnership with the African Institute for Energy Governance (Afiego).

As the dispute between Tullow/Heritage and the South African-led Divine Inspiration consortium over lucrative oil licences on Lake Albert comes to a head [2], the contract terms have been released for the first time. [3] PLATFORM’s analysis compares revenues delivered by two competing contracts, revealing that:

* Both Tullow/Heritage & Divine/H Oil’s contracts guarantee excessive profits, at the expense of Congo’s poor
* Tullow’s contract terms reduce the Congolese take by around 15%, compared to Divine’s.
* If recognised, Tullow’s contract will cut Congolese government revenues by over $10 billion – a figure equivalent to the country’s entire national debt. Tullow and the British Embassy in Kinshasa have been lobbying hard for these contract terms. This represents a significant transfer of wealth from some of Africa’s poorest to British and Irish investors.

In ”A Lake of Oil”, PLATFORM also raises concerns about:

* Co-operation between oil companies and military groups and the likelihood of escalating resource-driven war in eastern Congo.
* The legal rights granted to flare natural gas
* The complete absence of penalties for environmental damage
* The ‘stabilisation clause’, which will restrict DRC’s ability to improve its environmental protection and human rights standards in the future

Alfred Buju, head of the Justice and Peace Commission in Ituri, DRC, at the heart of Exploration Block 2, said: “This report reveals the contracts that will affect our communities and raises serious concerns about who will benefit from oil extraction in Ituri. We need the government and international companies to be honest and clear – will our environment be protected? The history of natural resources in eastern DRC makes us worry that oil will lead to more conflict.”

PLATFORM Campaigner Mika Minio-Paluello said, ”The reality is that extracting Congolese crude will escalate resource wars, transfer wealth from Congo’s poorest to London’s richest, create new health problems for local communities, increase corruption and pollute the land, water and air. It is up to social movements and civil society to create the pressure to defend rights, livelihoods and Congo’s rich environment.”

PLATFORM Researcher Taimour Lay in Bunia, Congo DRC, said “The confidential documents we have published make clear that the British government and oil companies have been lobbying for terms which leave Congo significantly worse off than another contract already on the table. This shows a wanton prioritisation of profit and British control of African resources over all else.”

Taimour Lay added, “Tullow’s statements demonstrate strength in corporate responsibility rhetoric. Yet their practice here on Lake Albert tells a different story – one of arrogance, environmental damage, collusion in secrecy and indifference to human rights abuses.”

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