On the 12th of March 2015, oil company SOCO International Plc published its preliminary results for the year ending on the 31st December 2014. Virunga regained some momentum after the Oscars, the risk to redraw Virunga’s national park perimeter to accommodate oil exploration made the headlines, WWF seemed to be “reconsidering its victory” [1] and Kinshasa announced that they wanted to find a way “to explore judiciously” there in order to “reap the profit of its resources to benefit the people who live there” [2].
Since SOCO’s publication of its financial results much attention has been given to the modification of the boundaries of Virunga and the possible interest of DRC government in opening up the park to oil exploration. Two striking details about this: first, both facts are not new and second are we not missing an important piece of information behind these headlines?
No Time to Breathe and Recover for Virunga
In June 2014, in the joint statement with the World Wildlife Fund (WWF), SOCO committed “not to undertake or commission any exploratory or other drilling within Virunga National Park “unless UNESCO and the DRC government agree that such activities are not incompatible with its World Heritage status” and WWF agreed “to stop further pursuit of its complaint with the UK National Contact Point” under the OECD Guidelines for Multinational Enterprises.
Taking the heat and responsibility off the company, closing the OECD complaint and any further examination of the human rights violations raised in the complaint by reaching this agreement [3], and putting the future of Virunga in hands of the DRC government and the UNESCO was a big “gamble” coming from this conservation organization.
Since 2012 we witnessed the ongoing discussions of the Congolese authorities with the national and international community on how oil exploitation could be conciliated with conservation and protected areas in the DRC. In January 2014, the Congolese Prime Minister Augustin Matata Ponyo, declared in a meeting about oil in Goma that they had chosen to transform the country’s natural resources into wealth and these same government officials pleaded for oil exploration in protected areas, including Virunga National Park.
The DRC government was already willing to explore the options and possibly request the UNESCO a boundary change to allow oil in Virunga by beginning of 2014; this was officialy presented as an option with the joint statement in June. This became even more crystal clear when @virungamovie[4] contributor Melanie Gouby leaked a document dated on the 19th May 2014 showing that the ICCN delegation to the UNESCO annual session of the World Heritage committee starting end of June 2014, just two weeks after WWF-SOCO’s statement, was to be funded by Soco DRC. This allegation was denied by SOCO in a Guardian article[5], reporting to have said “It was definitely not paid for by Soco in any way. A request [for Soco to pay for the delegation] was made by the ICCN in May but was politely turned down”.
If the risk for UNESCO’s World Heritage Committee to downgrade Virunga’s World Heritage Status and/or to reduce the park’s size by changing the borders is not new, what is?
Some elements of SOCO’s last management report, the reduction of its staff and operations in DRC and the fact that their shares slumped after writing off US$79.5mln from exploration assets in Vietnam and the Democratic Republic of Congo[6], cast new light on the whole situation. We might have entered a new battle ground where the falling oil price and the possible oil peak are playing a more important role in Virunga’s battlefield and future than we might have considered at first sight.
Some new facts behind all these headlines[7]:
- Data interpretation of SOCO’s seismic survey will be handed out to DRC government by mid-2015
- SOCO says to have no further involvement in Block V after providing the DRC government with interpretation of the seismic results.
- SOCO acknowledges that the DRC government is anticipating discussions with UNESCO involving the future of the Virunga National Park; but has no involvement in these discussions.
- SOCO’s shares slumped after writing off US$79.5mln from exploration assets in Vietnam and the Democratic Republic of Congo. Falling oil prices also put a dent in the group’s financial results[8].
SOCO might probably not be willing to re-open business in Virunga after his last “slump”, its shareholder’s pressure and the ongoing independent review by Clifford Chance LLP, engaged by the company to assess allegations of intimidation and/or human rights abuses of their activities in DRC, but regardless all this, the company will be providing the DRC government with interpretation of the seismic results by mid-2015.
This leaves us with a few possible scenarios for Virunga:
1. If oil reserves are proven in profitable quantities, this will inevitably provide ammunition for the DRC and industry to use in any effort to remove Virunga’s World Heritage listing and go forward with oil exploration.
2. If oil reserves are not proven, then there is no guarantee that the company’s costs will be covered so the host government may not maximize its potential return; and as we know in the oil industry, the value of an oil and gas company is mainly determined by its reserves. We might then enter a new game, with much speculation from both-sides, the government and the company, surrounding the price and possible reserves within of the oil concession Block V.
SOCO may not stay, but will probably try to sell their Block V concession to another company. BUT which company will be willing to pay “the price” when we are in the midst of an oil crisis with falling oil prices and US$ 79 million write-off that need to be recovered[9]?
3. If oil reserves are proven, but the falling oil prices continues to put a dent in the potential return to the government and company: they might choose to wait. It will not be the first time that a company comes back after 10 years absence to an oil concession, or that a government changes plans around extracting oil in a key biodiversity reserve…
This might give the government enough time to start the negotiation process with the UNESCO for the possible redraw of the park boundaries in order to allow exploration in a few years.
However it might also give the DRC Government and Virunga the time and possibility to prove another possible development scenario for DRC based on its green potential and the sustainable use of its resources.
The risk of drilling for oil in Virunga might always remain, as long as we don’t change our economic model and look at new ways of sharing this planet and creating sustainable development models that not only benefit corporations but also people who depend on healthy ecosystems for their survival.
Investing in Virunga is a valuable opportunity to conserve the natural basis on which the economy and livelihoods depend and an effective pathway to address poverty, create employment and improve the overall well-being of the population in Congo.
As Naomi Klein says in “This Changes Everything: Capitalism vs. The Climate:
“Our economic system and our planetary system are now at war. Or, more accurately, our economy is at war with many forms of life on earth, including human life. What the climate needs to avoid collapse is a contraction in humanity’s use of resources; what our economic model demands to avoid collapse is unfettered expansion. Only one of these sets of rules can be changed, and it’s not the laws of nature.”
SV
[1] Read more at: http://www.dailymail.co.uk/wires/afp/article-3001567/WWF-urges-DRC-not-change-Virunga-park-boundaries.html
[2] Read more at: http://phys.org/news/2015-03-gorillas-oil-dr-congo-explore.html#jCp
[3] The parties reached an agreement and this is recorded in their statements published on 11th June and attached at Annex A. to this Final Statement. / 13. The NCP’s report of the agreement in this Final Statement concludes the process and closes the complaint. The NCP will not make any further examination of the issues raised in the complaint and will not make any follow-up statement because the parties’ agreement does not provide for this. [https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/330392/bis-14-967-uk-ncp-final-statement-following-agreement-reached-in-complaint-from-wwf-international-against-soco-international-plc.pdf]
[4] http://virungamovie.com/blog/details/8038/update-soco-have-denied-the-allegation-that-it-paid-for-the-iccn-delegation-in-this-guardian-article
[5] http://www.theguardian.com/environment/2014/jun/19/soco-congo-drc-virunga-oil-unesco-doha
[6] http://www.proactiveinvestors.co.uk/companies/news/78198/soco-international-slumps-as-oil-prices-and-write-off-dent-profits-78198.html
[7] http://uk.advfn.com/news/UKREG/2015/article/65819087?xref=newsalerttweet&adw=1126416
[8] http://www.proactiveinvestors.co.uk/companies/news/78198/soco-international-slumps-as-oil-prices-and-write-off-dent-profits-78198.html
[9] Also important will be to know in what are “the further $5.9 million anticipated future expenditure to complete the current work programme on Block V” going to be invested in, if the company says to have no activity or staff in block V and “this even in the absence of plans to continue thereafter” .
SAVE VIRUNGA 