DRC’s deal with BVI companies said to be illegal

Two oil blocks in eastern Democratic Republic of Congo (DRC), located on the border with Uganda , were sold to the companies registered in the British Virgin Islands and owned by relative of country’s president. The presidential decree, according to which the blocks were awarded to companies Caprikat and Foxwhelp, was published on June 22, 2010. 

However, previously the DRC had signed contracts with two other companies to develop the blocks. After the contracts were awarded to the two new companies, one of the previous companies having contract with DRC, Tullow Oil, has not received presidential decree to begin exploration of its blocks and now is considering to start legal action.

Another company, Divine Inspiration Group (DIG), registered in South Africa, signed a competing contract for block 1 in 2008, and spent about US$4 million in signing bonuses and fees to secure the block. Andrea Brown, the executive director of DIG, said that “the developments with respect to the block 1 contract are not in line with principles of transparency and due process”. This company is going to appeal for compensation, looking forward to constructive engagement with the government on this matter.

The oil blocks have an estimated 2 billion barrels of reserves that have already been discovered. According to the DRC, exploration is to begin in the near future.