The Democratic Republic of Congo’s government breached its own regulations by failing to publish a contract for its purchase of an oil block from Israeli billionaire Dan Gertler last year, Global Witness said.
Nessergy Ltd., an oil company owned by Gertler, paid $500,000 for 95 percent of Congo’s stake in the offshore block in 2006, according to the Oil Ministry. Congo’s government paid $150 million to buy it back last year, according to le Soft, a Kinshasa-based newspaper. A Nessergy official declined to comment on the figure when contacted yesterday by phone. Oil Minister Crispin Atama did not respond to an e-mail or three phone calls when Bloomberg sought comment.
The deal “shares many similarities with a string of secret deals in Congo’s mining sector, where mining rights were bought at knockdown prices by offshore companies and then ‘flipped’ to major international firms for vast profit,” Global Witness, the London-based advocacy group, said in an e-mailed statement.
Congo’s government regulations require that contracts for any deal involving the country’s natural resources be published within 60 days of execution. In 2012, the International Monetary Fund canceled its loan program with Congo for failing to publish details of a copper mining deal with Gertler.
A report by Kofi Annan’s Africa Progress Panel last year said Congo lost more than $1.36 billion in revenue by selling mining assets to Gertler at prices below market value from 2010 to 2012.
Gertler’s company, Fleurette Group, said in an e-mailed statement yesterday that it could not divulge the amount it was paid for the oil block because of confidentiality agreements with Congo and Angola, which are developing the oil field together.
The block, 14C, is located in a zone of common interest in the Atlantic Ocean, and adjoins Chevron Corp. (CVX:US)’s block 14. In April, Atama said Angola’s state oil company, Sonangol, will pay Nessergy for ceding its rights in the project. Congo will reimburse Sonangol from future production revenue, he said.
Fleurette said in its statement that the Nessergy block increased in value since its 2006 purchase because of new oil finds in the region, higher oil prices, and the advent of the common-interest zone, which it says it helped create.
“Despite Nessergy making considerable efforts to find development partners, it has not been able to progress the development of the block for over seven years,” Fleurette said in an e-mailed response to questions today. “In order to aid the progression of the block and prevent further delay, Nessergy has agreed to hand the rights back in return for a fee to compensate it for not being able to progress development.”
A confidential U.S. diplomatic cable from 2009 published online by the advocacy group Wikileaks said Gertler originally bought the block in a “corrupt oil deal” with the help of Congo’s officials. The sale “infuriated” Angola, which considered the blocks Angolan property, the cable said.
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