Africa is emerging as a big oil and natural gas reserve. As a result lots of new companies have been making their entrance in the Great Lakes region.
As some investments analyst says: ”nothing goes up faster than when you announce a major [oil] find in some geopolitical backwater”. That is precisely what happened with the discovery of oil, an estimated billion barrels, at Lake Albert, one of Great African Lakes – and now Lake Edward, between Uganda and the Democratic Republic of Congo.
This discovery attracted small and relatively unknown companies, like Soco International, Tullow Oil, Dominion Petroleum and others. The area is one of the most unstable and conflict prone zones in the word with a staggering 5.4 million death since 1998 in Eastern Congo, also home of the Virunga National park and refuge of the last mountain gorilla population.
But why are investors and companies attracted by political and economic instability in such deadly zones? Why will a London stock exchange company drill and pump oil from a UNESCO protected World Heritage site?
Simple: from the moment that oil was discovered companies could make multi-billion gains. It is one in a hundred chance; “these companies go from little-known penny stocks to multi-billion-dollar mid-majors”. SOCO international with operations in West Africa and Vietnam owns 38.25% of the oil concession in Block V, containing 52% of the Virunga National park, and saw its revenues increase from $48.4 millions in 2010 to $234.2 millions in 2011.
This seems to be not uncommon business for oil companies and investors in this sector – the “smaller, nimble, hungrier companies are” the best they “can go into the less savory parts of the world and get things done” . In other words the less known oil companies are, the more risks they can take and go into zones that other major oil companies such as TOTAL and ENI are ‘diplomatically‘ avoiding, for now…. As SOCO says, recognizing early opportunities and, having early access into regions and projects is one of their company strategies. The oil industry also calls this type of oil enterprises “ wildcatters”; they like risky business and are at the forefront of oil discovery in places where nobody has gone before.
This is also the story of Dominion Petroleum, an oil explorer in East Africa that owned 46,75% participating interest in Block V. In 2011, they drilled their first wildcat well in the Ugandan part of Lake Edward, on the shores of the Queen Elizabeth Park, before being taken over in 2012 by Ophir Energy who is now the owner of the biggest oil concession in the Virunga National Park.
Finding and buying small oil Wildcatters is big business in the oil sector, and quite an advantage for more financially stable oil companies. These major oil companies do not only take advantage of the “falling share prices to snap up cash-hungry explorers” but they also profit from the openings and access that these smaller companies are offering them in no-go-zones. Wildcatters can drill wells far from the usual oil fields, they can operate on the verge of legality and get things done, no matter what. For instance, SOCO has already been sued by the ICCN (Institut Congolais pour la Conservation de la Nature) for illegally entering the Virunga National Park and pushing their oil exploration plans.
Openly forcing exploration in an armed conflict zone or World Heritage site will be too risky for the major oil companies advertising their corporate social responsibility endeavor. However, taking over the shares and participating interests in these controversial concessions when the first wildcat well has been drilled seems to be a lucrative option. Who will be next, SOCO International? Will SOCO sell to GAZPROM, like they did in Libya?
But the most important question remains. Who will be held accountable for pushing oil exploration in a World Heritage site, for ruining 40 years of conservation work and for threatening the stability of the whole Great Lakes region?
A wildcatter, a major oil company or the governments behind these companies?
 Estimate from 1998 to 2009 – Source: http://www.washingtonpost.com/wp-dyn/content/article/2009/08/01/AR2009080101889.html
 Source: SOCO Annual report 2011 – http://www.socointernational.com/index.php?cID=108&cType=document
 The Ugandan part of the Lake Edward is not protected by the Word Heritage site convention as the DRC side, being not a part of The Virunga National Park.