We Thought You Should Know This: Kinshasa bows to Surestream/ENI
Waiting for an exploration contract for three years Britain’s Surestream and its Italian party are now pinning hopes on Ndunda. According to our sources, Surestream has received a letter from Congo-K’s hydrocarbons minister, Crispin Atama, proposing changes in the initial production sharing contract for the Ndunda permit in the coastal basin.
The amendments, for instance, clarify ENI’s arrival on block (which took place in 2011) as partner of Surestream and state-owned Cohydro. And if all sides agree it will lead to a renewal of the permit and a second, five year phase of exploration. Surestream has already signalled its agreement and the Italian major is expected to shortly follow suit.
Surestream has been waiting for three years for the Kinshasa authorities to renew its three licences (Ndunda with ENI on one side; and Yema and Matamba-Makanzi that it operates with Glencore on the other). Kinshasa refused to budge up to now because it hoped to slap a tax on Surestream concerning ENI’s arrival on the permit, which now won’t be the case.
Another problem holding back a government go-ahead was the price tag for the renewal. The shift to the second phase of exploration now costs $1,250,000 whereas in 2006 when Surestream signed its contract such an operation was billed at just $125,000. Because of the stabilization clause in its contract Surestream never agreed to the principle of paying 10 times more than what had initially been scheduled. The junior never gave in on that point. Hence the long tug-of-war with the Congolese authorities.
An order to draft the amendments was given by prime minister Augustin Matata Ponyo even though some advisers of president Joseph Kabilawere against renewing the licence unless the tax was paid.
Because its operations have been effectively frozen in Congo-K for the past five years, Surestream laid off almost all of its staff (including its local managing director, Baudouin Ebeli Popo), keeping only three employees in the country. The situation is even worse for ENI because the Italian major now has no full-time employee in the country.(AfricaEnergyIntelligence)
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