Congo nears settlement of $ 619 million oil arbitration case

The Democratic Republic of the Congo plans to settle a $ 619 million arbitration case by granting a small South African oil company nearly half of that amount in cash and new oil and mining permits.

The settlement with DIG Oil Ltd. would resolve a 13-year dispute over oil licenses in the central African country. The Johannesburg-based company won the award in 2018 before an arbitration tribunal in France which concluded that the Congo had failed to honor two production-sharing agreements approved by the administration of former President Joseph Kabila.

The interim settlement would require Congo to pay DIG Oil $ 8 million in good faith, with an additional $ 292 million paid by a combination of assets and possibly more cash, according to representatives of the company and the government. Congolese government. Kasongo Mwema Yamba Yamba, government spokesman, did not immediately respond to an email request for comment.

“The terms of this have yet to be finalized, but are not exclusive to oil concessions and may include mining concessions or any other asset or activity,” said Andrea Brown, CEO of DIG Oil, in an email response to questions . “The resolution of this dispute aims for an amicable solution, while at the same time, promote new investments in the DRC. “

The Paris-based International Court of Arbitration ruled in November 2018 that the Congo “had defaulted on its obligations” and had to pay DIG Oil $ 617.4 million to cover future economic losses and expenses already incurred. A Paris appeals court rejected Congo’s proposal to quash the sentence in January 2020, and the amount rose to $ 619 million, including costs.

Congo, one of the poorest countries in the world, had only $ 671 million in reserves at the end of February, according to the latest data from the central bank.

The Congolese Ministry of Petroleum awarded DIG Oil a contract for three blocks in the center of the country in December 2007, and another permit on Lake Albert to a group of investors including the company a month later, but Kabila did not has never signed either of these agreements.

The arbitration court agreed with DIG Oil that the Congo had violated the second agreement by reassigning the Lake Albert license in 2010 to a company controlled by Israeli billionaire Dan Gertler and had not given presidential approval for the others. blocks “within a reasonable time”.

Last April, DIG Oil began enforcement proceedings in the United States in District Court for the District of Columbia. Congo was ultimately declared in default after failing to respond to a summons.

According to a summary shared by a member of the Congo negotiating team, the settlement aims to put an end to coercive action, to prevent the Congo from exhausting its reserves to pay the sentence and to revive the development of the oil block. from Lake Albert.

Gertler’s companies own two blocks on the lake, which borders Uganda. It is currently sanctioned by the US Treasury for alleged corruption in the Congo, complicating the efforts of President Felix Tshisekedi’s administration to transfer the blocks to other buyers. Gertler denies any wrongdoing and has not been charged.

Uganda this weeksigned a $ 5.1 billion deal with Total SE to develop its side of Lake Albert and build a pipeline to the port of Tanga in Tanzania. The French major said oil would start flowing in early 2025.

Brown said there was no mention of the Lake Albert block in the proposed settlement agreement.

DIG Oil also indirectly owns a 42.5% stake in the third Congolese oil block along its border with Uganda. South AfricaEfora Energy Ltd. indirectly holds the same stake, the Congolese state owning 15%.

Gertler did not respond to requests for comment through a spokesperson.