Although
it should provide development opportunities, renewed oil interest in
the Democratic Republic of the Congo (DRC) represents a real threat to
stability in a still vulnerable post-conflict country. Exploration has
begun, but oil prospecting is nurturing old resentments among local
communities and contributing to border tensions with neighbouring
countries. If oil reserves are confirmed in the east, this would
exacerbate deep-rooted conflict dynamics in the Kivus. An upsurge in
fighting since the start of 2012, including the emergence of a new
rebellion in North Kivu and the resumption of armed groups’ territorial
expansion, has further complicated stability in the east, which is the
new focus for oil exploration. New oil reserves could also create new
centres of power and question Katanga’s (DRC’s traditional economic hub)
political influence. Preventive action is needed to turn a real threat
to stability into a genuine development opportunity.
Potential
oil reserves straddle the country’s borders with Uganda, Angola and
possibly other countries and could rekindle old sensitivities once
exploration commences. In the context of a general oil rush in Central
and East Africa, the lack of clearly defined borders, especially in the
Great Lakes region, poses significant risk for maintaining regional
stability.
Clashes
between the Congolese and Ugandan armies in 2007 led to the Ngurdoto
Accords establishing a system for regulating border oil problems, but
Kinshasa’s reluctance to implement this agreement and the collapse of
the Ugandan-Congolese dialogue threaten future relations between the two
countries. In the west, failure to find an amicable solution to an
Angolan-Congolese dispute about offshore concessions has worsened
relations between the two countries and led to the violent expulsion
from Angola of Congolese nationals. Instead of investing in the
resolution of border conflicts with its neighbours before beginning oil
exploration, the Congolese government is ignoring the problem, failing
to dialogue with Uganda and officially claiming an extension of its
maritime borders with Angola.
The
abduction in 2011 of an oil employee in the Virunga Park, in the Kivus,
is a reminder that exploration is taking place in disputed areas where
ethnic groups are competing for territorial control and the army and
militias are engaged in years of illegally exploiting natural resources.
Given that the Kivus are high-risk areas, oil discovery could aggravate
the conflict. Moreover, confirmation of oil reserves in the Central
Basin and the east could feed secessionist tendencies in a context of
failed decentralisation and financial discontent between the central
government and the provinces.
Poor
governance has been the hallmark of the oil sector since exploration
resumed in the east and west of the country. Even with only one
producing oil company, the black gold is the main source of government
revenue and yet, with exploration in full swing, oil sector reform is
very slow. Instead of creating clear procedures, a transparent legal
framework and robust institutions, previous governments have behaved
like speculators, in a way that is reminiscent of practices in the
mining sector. Reflecting the very degraded business climate, they have
allocated and reallocated concessions and often acted without
considering the needs of the local people and international commitments,
especially regarding environmental protection.
The
official division of exploration blocks includes natural parks, some of
which are World Heritage Sites. It also directly threatens the
resources of local populations in some areas. Initiatives to promote
financial and contractual transparency are contradicted by the lack of
transparency in allocating concessions. The state’s failure to
adequately regulate the diverging and potentially conflicting interests
of companies and poor communities is clearly causing local resentment,
which could easily flare up into local violence that could be
manipulated.
In
a context of massive poverty, weak state, poor governance and regional
insecurity, an oil rush will have a strong destabilising effect unless
the government adopts several significant steps regionally and
nationally to avert such a devastating scenario. Regionally, it should
draw on the close support of the African Union (AU) and the World Bank
Group to design a management model for cross-border reserves and help
facilitate a border demarcation program. Nationally, the government
should implement oil sector reform, declare a moratorium on the
exploration of insecure areas, especially in the east where the
situation is again deteriorating, until these territories are made
secure, and involve the provinces in the main management decisions
concerning this resource.
RECOMMENDATIONS
To the countries of the sub-region:
1.
Negotiate a framework agreement for the exploration and development of
cross-border reserves, with the support of the AU and the World Bank
Group, to provide for the involvement of one or more companies,
revenue-sharing and dispute resolution mechanisms.
To the Government of the Democratic Republic of the Congo and neighbouring countries:
2.
Begin a border demarcation program, with support from the AU Border
Programme, before allocating any more exploration blocks in disputed
areas, to clarify the situation on various borders; implement the
Ngurdoto Accords with Uganda; and seek a comprehensive and amicable
agreement to end disputes with Angola.
To the Government of the Democratic Republic of the Congo:
3. Declare a moratorium on exploration in
insecure areas of eastern Congo and enforce the ban on exploration in
World Heritage Sites.
4. Reform oil governance, including by:
a) defining a policy for the sector and setting up an hydrocarbons code;
b) ensuring contractual and financial transparency;
c) democratising
the decision-making process for the awarding of oil rights and the
assessment of the implementation of the production sharing contracts
signed with the companies;
d) granting
exploration and production rights following an open and transparent
competition and banning mutual agreements and allocation of exploration
and production rights to companies whose beneficial ownership
information is not publicly available; and
e) determining
clearly the fiscal, social and environmental obligations of companies
according to international good practice and making information and
consultation of local communities compulsory, as well as a participatory
approach for local development.
5. Involve affected provinces in main oil
management decisions and, if oil reserves are confirmed, ensure the
provinces and local communities benefit from revenues
.
To the African Union, the World Bank Group and donors:
6. Provide technical and financial
assistance to the Congolese authorities for the border demarcation, the
framework agreement for the exploration and development of cross-border
reserves and oil governance reform.
7. Support the Congolese civil society efforts to build a monitoring capacity in the oil sector.
To the oil companies:
8. Disclose contracts and payments made to the Congolese government.
9. Respect international laws and agreements and Congolese laws.
10. Include a human rights assessment in their preliminary studies.
