Tullow Oil, the UK explorer with projects in Africa, said it may allow an additional partner into an exploration deal in the Democratic Republic of Congo following a government request.
The company may also “substantially” increase the signing bonus to secure the rights to explore in Lake Albert, Tim O’Hanlon, Tullow’s vice president for African business, said in an interview today in Congolese capital, Kinshasa.
Congo’s Hydrocarbons Minister, Rene Isekemanga Nkeka, said on March 29th that Tullow and Heritage Oil had won back rights to explore Block 1 on Lake Albert, a year after they were withdrawn by Minister Isekemanga’s predecessor, who cited contract irregularities. The deal for two blocks would be split into separate accords, both of which would include new partners, Minister Isekemanga said.
“With three capable partners already involved, including the DRC national oil company, we see no need to further complicate matters,” Mr O’Hanlon said. “However, if the government truly wants to see another partner in the venture, Tullow is ready to let someone in.”
Lake Albert straddles the Congolese-Ugandan border. Congo’s President, Joseph Kabila, and his Ugandan counterpart, Yoweri Museveni, on March 4th agreed to accelerate joint exploration for oil in the region.
Tullow and Heritage have made oil discoveries on the Ugandan side of the border, including at the Buffalo-Giraffe oilfield - the largest onshore oil deposit discovered in sub-Saharan Africa in more than 20 years, according to Heritage.
The companies envisage a coordinated operation for the whole lake, which would require a $2 billion pipeline to pump the oil 800 miles (1,287 kilometers) to the Indian Ocean coast, where it would be shipped to the international market.
Any additional partner brought on board would have to be vetted by Tullow “in the most transparent way to ensure it’s the right partner and to avoid having speculators involved,” Mr O’Hanlon said.
Tullow’s year-long dispute with the government left Congo lagging behind Uganda in terms of developing its reserves, Minister Isekemanga said.
“The DRC has lost too much time on this problem,” he said. The government will give its final position “in the next days.”
Congo, which holds a third of the world’s cobalt reserves and 4 per cent of copper, is searching for sources of revenue as the global economic slump cuts demand for the metals.
Tullow’s 2006 deal for Blocks I and II, the result of an international bidding process, can’t be broken up, O’Hanlon said.
A single additional stakeholder may get up to 15 per cent of the joint venture currently owned by Tullow, Heritage and Congolaise des Hydrocarbures, the state-owned oil company, he said.
Bloomberg