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The DRC Government Negotiates to Boost its Production

Source: Bloomberg 7/20/2011, Location: Africa

The Democratic Republic of Congo is in talks with Petroleo Brasileiro SA and Chevron Corp. about investing in the country’s budding hydrocarbons industry, Oil Minister Celestin Mbuyu said. The Central African nation wants to improve its oil and gas output and infrastructure and is allocating blocks to companies for exploration. San Ramon, California-based Chevron and Congo are discussing gas production and treatment plans that may feed into the company’s projects in neighboring Angola. Cohydro, Congo’s state-owned oil producer, is seeking a cooperation deal with Petrobras after signing a similar agreement on July 7 with Korea National Oil Corporation. Petrobras officials will visit Congo in the coming weeks “and then we’ll put together a proposal that I will present to the government,” Mbuyu said in an interview in Kinshasa, the capital, on July 15. A deal will likely include training and transfer of expertise between the Rio de Janeiro-based company and Cohydro, he said.

Congo currently produces about 25,000 barrels of oil per day and plans to increase output through drilling near its eastern borders with Tanzania, Burundi, Rwanda and Uganda, as well as in its central basin and along the western coast bordering Angola. The country is courting investment for exploration, pipelines, distribution and storage, and data gathering to help develop the industry, Mbuyu said.

Tropical Forest

The minister led a delegation of Congolese officials to Brazil last month, where Petrobras shared its experience with oil and gas operations “in tropical forest and coastal areas,” the company’s press management office said in an e- mailed response to questions. Congo is home to the world’s second-largest tropical forest, after Brazil’s, some of which has been divided up into oil blocks. Petrobras declined to comment on any ongoing discussions with Congo.

Chevron, the second-largest U.S. energy company, signed an agreement with Congo in November that will allow the company to ship gas from Angola’s enclave of Cabinda to a new $9 billion liquid-natural-gas plant in Soyo via a pipeline that cuts through Congo’s narrow strip of Atlantic coastline. The Soyo plant may be used to treat Congolese gas as well, and Chevron has expressed an interest in looking at potential gas deposits in Congo, Mbuyu said. The company already has a 17.7 percent stake in a concession off Congo’s coast that produced about 14,000 barrels of crude per day in 2010, according to Chevron’s annual report.

Gas Flaring

Congo is also burning gas as a by-product of its petroleum production and Chevron has agreed to look into ways of capturing the gas for market, Mbuyu said. Mbuyu met with Chevron officials in May in the U.S., he said. A spokesman for Chevron said in an e-mail that the company doesn’t comment “on negotiations regarding specific business opportunities.” Chevron has delayed development of part of an offshore oil block in Angola whose ownership is disputed by Congo, according to the company’s annual report. Congo and Angola are still working on an agreement over their maritime borders, Mbuyu said. A parliamentary decision on a new hydrocarbons code, which would help regulate the industry, may be delayed by elections scheduled for Nov. 28 of this year, Mbuyu said.

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