Thursday, 13 May 2010


Leaked oil contracts threaten resource wars and $10 billion rip-off by British company

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 by oil watchdog PLATFORM in partnership with the African Institute for Energy Governance (Afiego). [1] 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. (p26 & 33)
• The legal rights granted to flare natural gas (p.24)
• The complete absence of penalties for environmental damage (p.21),
• The 'stabilisation clause', which will restrict DRC's ability to improve its environmental protection and human rightsstandards in the future (p.27)
Alfred Buju, head of the Jus! tice and Peace Commission in Ituri, DRC, at the heart of Exploration B lock 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 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 Uganda'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 lobby! ing 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."
The report recommends that "Urgent changes should be made to the contracts, legislation and regulatory regime covering oil, to achieve some level of environmental protection, ensure accountability for military forces enforcing security, to protect a degree of Congolese sovereignty, minimize economic distortion through revenue flows, and capture a more appropriate share of the revenues and to re-apportion the economic risks."
Taimour Lay in Bunia, Congo (GMT+ 3): ++00 243 995 291 018,
Mika Minio-Paluello in San Francisco, USA (GMT + 8) : ++1 925 234 0910,
PLATFORM Office in London, England: +44 207 4033738
NOTE 1: The analysis was carried out by PLATFORM, in partnership with the African Institute for Energy Governance. The report is available at:
NOTE 2: The Congolese blocks on Lake Albert are widely assumed to hold large reserves of crude oil, following Tullow and Heritage's major discoveries on the adjoining blocks on the Ugandan side of the border. See
NOTE 3: PLATFORM has obtained and released copies of Tullow/Heritage’s 2006 PSA for Blocks 1 & 2 and Divine Inspiration/H! Oil's 2008 PSA for Block 1, on Lake Albert. The 2006 contract is disputed by both sides since the Congolese Ministry of Energy appeared to annul it in October 2007, prior to reassigning Block 1 to the Divine Inspiration consortium in 2008. The Congolese government has expressed a desire to finalise the status of contracts and begin exploration during 2010.
The contracts and analysis are available in French and English at:
Dr Sarah Wykes
+44 7971064433

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