Chevron to finalize production deal with Congo, Angola for offshore oil block

Michael J. Kavanagh, Bloomberg April 13, 2023

(Bloomberg) – Chevron Corp. is finalizing a production-sharing agreement with Angola and the Democratic Republic of Congo to operate their shared offshore oil block, Congolese Oil Minister Didier Budimbu Ntubuanga said.

There is a draft of the pact and this month the parties have been invited to discuss development of the block known as both 14c and the common interest zone, Budimbu said in an interview in Congo’s capital, Kinshasa.

“We’re practically at the end,” he said. The two countries have been negotiating development of the block in the Atlantic Ocean for about 15 years. A company owned by Israeli billionaire Dan Gertler previously held shares in the block.

Budimbu is pushing to expand Congo’s oil output from 25,000 bpd and is auctioning 27 new blocks as part of the effort. Angola pumped about 1 MMbpd in March, according to data compiled by Bloomberg, making it Africa’s third-biggest producer. The two countries have had a longstanding dispute over other offshore oil blocks controlled by Angola that Congo claims as its own.

A spokesman for Chevron declined to comment.

Angola’s state-owned Sonangol EP told Bloomberg in an email that the Angola National Agency of Petroleum, Gas and Biofuels, or ANPG, had taken over its role as national concessionaire in the partnership, which is split equally between the two countries. ANPG didn’t respond to emails requesting comment.

Gertler shares

As part of the deal, Sonangol is writing off a $200 million debt owed to it by Congolese state oil company, now known as Sonahydroc SA, Budimbu said.

The debt stems from a 2012 transaction in which Sonangol paid $150 million to Gertler’s Nessergy Ltd. to relinquish its shares in the common interest zone. Nessergy had bought most of Congo’s shares in 2006 for $500,000.

Budimbu said that in addition to the $150 million for Nessergy, Sonangol also financed a previously unreported payment of $50 million to the firm of Antoine Ghonda — an adviser to former Congolese President Joseph Kabila — who negotiated on Congo’s behalf. Sonangol also agreed to write off that payment, Budimbu said.

“Being in contract with Sonangol, it’s only Sonangol who is authorized to respond,” Ghonda wrote in response to questions from Bloomberg.

Sonangol declined to comment. In its 2021 annual report, the Luanda-based company said it paid $200 million as part of its 2012 agreement with Nessergy to sell its holdings in the block. The report says the money was set to be reimbursed through profit oil from the project and it doesn’t mention Ghonda’s payment.

Gertler’s lawyers said in an emailed letter responding to questions that Nessergy received only $150 million for the deal and that the Sonangol report suggesting Nessergy received more than that was “both incorrect and false.”

The U.S. government cited the deal in 2017 when it sanctioned Gertler for alleged corruption in Congo, saying it represented “a loss of $149.5 million in potential revenue” for the country. Gertler has always denied his deals in Congo were corrupt and has never been charged with a crime.  

Oil production from the block could start as early as two years after a deal is signed, Budimbu said.

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