DR Congo: Cancellation of the invitation to tender for the award of 27 oil blocks

The Minister of Hydrocarbons of the Democratic Republic of Congo (DRC), Aimé Molendo Sakombi, has announced the cancellation of the tender process for the award of 27 oil blocks, launched in July 2022. This decision, made official on 11 October 2024, marks a turning point in the country's oil ambitions, as it had hoped to attract major international companies to boost production and position itself as a key player in the African oil sector. However, a number of reasons have been put forward to justify this decision, including bids deemed inadmissible, late submission of bids, inappropriate proposals and a lack of competition.

The initial aim of this round of oil exploration licences was to increase domestic production while attracting major foreign investment. However, problems encountered during the bidding process have forced the government to review its strategy. Minister Aimé Molendo Sakombi told the Council of Ministers of the need to relaunch a new process, while avoiding the pitfalls that plagued the first attempt.

According to the report relayed by media close to the administration, the current process has been marred by non-compliant bids and irregularities in the proposals. The lack of genuine competition has also been a major obstacle, limiting the prospects of obtaining attractive and competitive bids for these strategic oil blocks. This observation prompted the Minister to propose an in-depth review of the terms and conditions of the new call for tenders, in order to better align the country's economic and environmental objectives.

The new cycle envisaged by the government should include a number of strategic adjustments. These include the resizing of certain oil blocks, particularly those located near protected areas, in order to minimise environmental impacts. This approach is intended to respond to the growing concerns of environmental organisations that are closely monitoring the exploitation of natural resources in the DRC, particularly in sensitive areas such as the Virunga National Park, a UNESCO World Heritage Site.

The government also plans to relaunch geological surveys to obtain more accurate and up-to-date information on available oil reserves. This data is essential to attract the interest of international oil companies, while reducing the risk of failure in the exploration phase. This recalibration of the call for tenders could also optimise returns for the Congolese government.

When the tenders were first announced in 2022, the Congolese authorities estimated the potential oil reserves in the 27 proposed blocks at 22 billion barrels. This bold estimate, backed by President Félix Tshisekedi, was intended to attract the attention of international investors by highlighting the colossal potential of the country's natural resources. However, this projection has been called into question by several sources. More conservative estimates put the potential at just 5 billion barrels, while the CIA Factbook credits the DRC with just 180 million barrels of proven reserves. This disparity in estimates reflects the challenges facing the country in its quest to exploit its resources reliably and profitably.

These uncertainties underline the need to refine geological assessments before relaunching the bidding process. In the absence of solid data, it is difficult to attract major international companies, which require minimum guarantees of the viability of exploration projects before investing substantial resources.

In addition to the economic stakes, oil exploration in the DRC has major environmental concerns. The country is home to some of the world's most precious and vulnerable natural areas, including the Virunga National Park, which is both a crucial biodiversity reserve and a potential oil exploration area. The balance between preserving the environment and exploiting resources remains delicate, and the government will have to deal with pressure from international NGOs that are working to protect these unique ecosystems.

In addition, the DRC's involvement in global initiatives to preserve the environment, while at the same time seeking to exploit its oil resources, places the country in a complex position on the international stage. It will have to demonstrate its ability to pursue a sustainable development policy while maximising the benefits of its natural resources.

The development of oil resources in the DRC is also hampered by a difficult economic and political context. The country is perceived as a risk by international creditors, due to its political instability and underdeveloped infrastructure. This perception increases the cost of exploration projects and slows down foreign investment. Logistical challenges and security risks add another layer of complexity to the equation, making the Congolese oil sector less attractive to major oil companies.

Despite these obstacles, the DRC remains determined to exploit its oil resources to support its economic development. The government hopes that revenues from oil and gas could account for 40% of the national budget, an ambition that will however require structural reforms to strengthen transparency, improve the business climate and attract quality investors.