Congo lags neighbouring Uganda's efforts to find oil, but decrees from President Joseph Kabila in June gave the green light to companies that waited three years to start exploring its eastern lakes, which straddle the border with Uganda.
"We should be drilling next year but export will still be three years away," Roger Cagle, deputy CEO of LSE-listed SOCO International
(SIA.L: Quote) and non-executive chairman of Dominion Petroleum
(DOPL.L: Quote), told Reuters in a telephone interview.
SOCO is the operator of the Albertine Graben's Block 5, which includes North Kivu's Lake Edward, with 38.25 percent in the joint venture, in which Congo's state oil company Cohydro also has 15 percent.
AIM-listed Dominion Petroleum has 46.75 percent and is also operator of Uganda's Block 4B, which borders Block 5 on the Uganda side of the lake, making Dominion the only company to have a stake in oil on both sides of the border.
Dominion is already drilling its first exploration well on the Ugandan side of the lake, with results expected this month.
"If there is a bad result it won't condemn Block 5, but if it's a good result -- we believe Block 5 will be in a better position in the basin," said Cagle, who said Congo was already playing catch-up to Uganda, which may have 2 billion barrels.
"Oil is in a common resevoir and if you don't drill on your side there's a possibility someone else is getting your oil," he added in the July 9 interview.
CONCESSIONS FOR CONGO
Block 5 is the least controversial of the four Congolese blocks ratified last month, facing no contest from rival companies or fee disputes.
Last month Tullow Oil (TLW.L: Quote) called the handing of two blocks it had already paid a signature bonus for to two surprise new entrants claimed by South African businessman Khulubuse Zuma a "smash and grab"
and is considering legal action. [ID:nLDE6611EO]
Following a May report from lobby group PLATFORM that argued Congo's deals to date would not sufficiently benefit the country, Block 5's investors paid an additional $500,000 signature bonus last month, bringing the total to date to $2.5 million, according to sources familiar with the deal.
"We did have to increase our signature bonus," said Cagle.
Andrew Cochran, CEO of Dominion Petroleum, said Congo would benefit from its presence on both sides of the border, adding that seismic exploration should begin in Congo this year too.
Despite having a larger share in Block 5, it agreed to make minority partner SOCO the operator in Congo to appease Congolese fears of a monopoly on both sides of the border, especially since oil will likely be exported via Uganda in a pipeline yet to be built, giving its neighbour greater control and revenues.
"The benefit (of being on both sides of the lake) is huge," Cochran told Reuters in a July 11 interview.
"Whatever happens in that basin we get a slice of it," he said, adding the companies would share data and coordinate on export.
"If we had a hostile party on the other side it would be much harder.
(Block 1 companies) Caprikat and Foxwhelp will have to face off against Tullow to export the oil," said Cochran of Tullow, which has concessions on the Uganda side.
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