KINSHASA, Aug. 16 (Reuters) - Italian oil and gas group Eni said it had signed a deal to take a share in an oil block in the Democratic Republic of Congo, marking its entry into the country and strengthening its position in Africa.
A slew of deals has raised interest in Congo’s oil prospects in recent months. Eni first signalled its interest in the vast country’s largely unexplored oil reserves last year.
"Eni enters the Democratic Republic of Congo by signing a farm-in agreement with UK-based Surestream Petroleum to acquire 55 percent and operatorship in the Ndunda block," Eni said on Monday in a statement released in Milan.
Earlier a letter dated July 29 and seen by Reuters said that independent Surestream had been granted permission to farm out 55 percent of its Ndunda oil block in western Congo.
The documents said Eni would finance its share of the costs and must commit to drill one or two exploration wells in the shortest time possible.
"The state renounces the right to pre-emption, and the company Eni will benefit from all the advantages foreseen in the partnership sharing agreement," said the letter from oil minister Celestin Mbuyu to Surestream’s Congo office.
State oil firm Cohydro and local firm International Business Oil SPRL (IBOS) retain 8 percent and 7 percent, respectively.
Surestream estimates its costs to date for its three Congo oil blocks, including Ndunda, at $68 million.
"Eni will be the operator of the Ndunda block and pay 55 percent of the back cost and spending going forward," Baudouin Ebeli Popo, general manager of Surestream’s local Congo subsidiary, told Reuters in an interview.
The Ndunda block lies in the country’s western Bas-Congo province, which produces the country’s only oil so far — about 25,000 barrels per day, mostly from French independent Perenco’s operations.
In its statement, Eni said the acquisition further strengthens its presence in the Sub-Saharan region, where it has an overall production in excess of 450,000 barrels of oil equivalent per day.
DATA ON OTHER SITES
But a number of foreign firms, including Eni, Total and Tullow Oil have shown interest in rights to blocks in the east, on the border with Uganda, where production is due to start next year.
"Congo has significant oil potential, but because of insecurity no major has wanted to come here, but now little by little that is changing and we have brought the entry of the first major," said Ebeli Popo, adding the deal would help the companies share the financial and technical risk.
IBOS, Ebeli Popo’s family company in which he has a majority share, also has 7 percent of the block.
Authorisation for four state protocols with Eni, requested last August by Eni Africa executive Roberto Casula, has also this month been granted, according to papers seen by Reuters.
Eni had paid $200,000 for access to data on four prospective oil sites nationwide — the Albertine Graben, Lake Kivu and Lake Tanganyika in the east and Cuvette Centrale in the centre, but the process was held up for a year, according to one ministry official.
A 42 percent stake in Surestream’s other two blocks, Yema and Matamba-Makanzi, which is to Ndunda’s west, was farmed out to Swiss company Glencore in 2007. The first exploration drilling on these blocks is scheduled to start next month.
