Too Soon for DRC Oil?

Advocacy groups called on the newly-elected government of the Democratic Republic of Congo to change how its natural resources are managed. They say the DRC has an opportunity to erase year's worth of government corruption in the natural resources sector. An oil company, SOCO International, said it had worked with local communities and was moving ahead with caution. While transparency and development go hand-in-hand, it may be too early either way to start making demands on Kinshasa.

The World Heritage Center, along with Global Witness, announced they've just become aware that South Africa Congo Oil International, based in London, signed an oil exploration deal in the DRC for a campaign in the Virunga National Park, a World Heritage Site and home to a protected species of rare gorillas. Authorities at UNESCO, during 2011 meetings with Congolese authorities, said no exploration or exploitation should be approved in the park because of international conventions and DRC laws dating back to the 1960s.

The conservative Heritage Foundation ranks the country 44th out of the 46 countries in sub-Saharan Africa in its economic-freedom index. Economic development in the country is "hampered" by "a long period of instability and violence" and enforcement of the law is, in general, "marginal." Furthermore, the Washington-based think tank said economic management is "poor" and "worsened by repeated political crisis."

Last year, DRC held just its second election since it gained independence in 1960. Incumbent Joseph Kabila, who took over for his slain father in 2001, secured his second term in office. The validity of the vote was questioned, dozens were killed after a court backed Kabila's victory and U.N. peacekeeping officials have described the situation in DRC as tense. Now-famous war crimes fugitive Joseph Kony, leader of the Lord's Resistance Army, is believed to be hiding in the country.

SOCO, which touts itself as a company "cultivating relationships" by "having early access" into regions, acknowledged it was working on a portion of the World Heritage Site, but said work consists largely of aerial reconnaissance. Any work it plans for the region, it said, won't be harmful to the environment and similar work there has already been conducted by another operator, for better or worse. Further activity would require the consent of DRC authorities.

Global Witness, in a reprimand, complained SOCO's plans for the region could exacerbate an already-tense situation in DRC. A follow-up statement calls on the government to make "wide-ranging changes" to laws governing the oil sector. DRC, however, likely isn't ready to manage its oil sector or its sensitive environment with any degree of effectiveness any time soon. The country has a culture of corruption and a legacy of militancy. No "early access," elections or reforms are likely to change that, unfortunately. While walking away isn't a solution, a metered approach by both sides of the argument may be the best chance there is for Kinshasa.

By. Daniel J. Graeber of Oilprice.com