Perenco in the DRC: when oil makes the poor poorer

Observatoire de Multinationales

Perenco in Bas-Congo, or how oil extraction destroys the environment and the livelihoods of local people, almost without giving them anything in return? In Muanda, “the poorest city in the world oil” exploitation of black gold by the Anglo-French company Perenco there appears to be no real benefit. A report by the CCFD-Terre Solidaire paints a damning picture of the situation. Not bode well as the Democratic Republic of Congo is attracting more and more interest from oil companies.

The narrow coastal strip of the Democratic Republic of Congo (DRC) at the mouth of the Congo River, is an area of ​​oil extraction – like off Angola, Congo – Brazzaville and Gabon neighbors, ALTHOUGH ‘on a smaller scale. Dubious privilege? In the DRC and in neighboring countries, the exploitation of black gold seems to have played no positive role in terms of development. Instead maybe. According to a recent report by a group of French and Congolese non-governmental organizations report these mining activities have a significant environmental and social costs for local populations. In Muanda coastal town which houses the deposits, the exploitation of oil is clearly not synonymous with wealth, but, according to the NGOs, human rights violation.

Diagnosis all the more alarming as the Democratic Republic of Congo is emerging as a prime hunting ground for the oil majors. If today the exploitation of black gold remains confined in Bas-Congo, a province in western DRC, prospecting operations are underway in different areas of the country, particularly around Lake Albert, the border with Uganda – a region characterized by both its rich biodiversity that the violence there for years. The whole history of the Democratic Republic of Congo has been marked by bloody exploitation of its natural resources – from rubber to the “conflict minerals” – by international economic and political forces. So that today, the DRC points to the 186th place of the Human Development Index prepared by the United Nations, on par with … Niger, home of Areva’s uranium mines. Behind the case of Muanda, the question is that of the capacity of the DRC (but also countries of origin of multinational firms) to develop legal and policy instruments to avoid history repeating itself with oil .

The poorest city in the world oil

Developed by the CCFD in connection with its Congolese partners – the Episcopal Commission for Natural Resources and Actions for the rights – Environment and Life (ADEV), the report Oil in Muanda: Justice discount shows how local populations suffer from the exploitation of oil without receiving the benefits claimed. On the one hand, the activities of Perenco cause pollution, environmental degradation and social upheavals that affect the fundamental rights of indigenous people, on the other, the “manna” supposed oil contributes nothing out the inhabitants of the Muanda poverty. Malnutrition and lack of infrastructure and the most basic services (water, electricity, waste), remain the rule. The official unemployment rate is 95%.

For thirty years that oil is used in Muanda (or Moanda), both on land (onshore ) and offshore ( offshore ). Concessions previously held by Chevron, were sold in 2000 to Perenco. The precise number of wells drilled onshore , on an area of over 400 square kilometers, is not known: Perenco refuses to communicate the information and, if a researcher has advanced end 2012 figure of 235 wells, residents say there are about 800. In any event, these wells are ubiquitous in the region Muanda, sometimes close boxes of the inhabitants  [ 1 ] .

As often in the oil extraction areas, leakage of crude, gas flaring and toxic waste are part of everyday Muandais. The report’s authors have collected many textual and visual evidence confirming the reality and extent of the pollution problems. Although residents have complained for many years of severe degradation of all natural habitats (freshwater, marine water, soil, air) driven by drilling, and that their accusations were confirmed repeatedly by experts or local officials or Perenco nor authorities have never officially recognized as isolated incidents. The company refuses to give any official information on pollution found, and the administration does not have the means to conduct its own environmental and health monitoring. Perenco even tends to return the responsibility for oil spills on “antisocial behavior”  [2 ] .

However, this environmental degradation is even more critical that people Muanda are highly dependent on local natural resources for their survival and for their income. The area also houses the Marine Park Mangroves, established in 1992 at the mouth of the river. An area of ​​unique biodiversity that is the subject of an international recognition under the Ramsar Convention on Wetlands. The park is vulnerable to oil pollution, but again, any form of environmental monitoring is ensured either by Perenco, or by local authorities.

Untraceable benefits

Fishing and agriculture accounted for between 2006 and 2010 more than 50% of the gross domestic product of the province of Bas-Congo, against only 25% for mining and oil. Perenco claims directly or indirectly contribute to the employment of 1,000 people, of which only 30% from Muanda same (14% for managers)  [ 3 ] . Most local employees Perenco are confined to menial duties, on behalf of sub-contractors, in questionable salary conditions and safety. So that the progressive degradation due to oil pollution natural resources leads to a net loss for the region, including in purely economic terms. And that’s not to mention the impact of oil on the well-being and dignity of these people, for the report, it is indeed of human rights violations – violations of their economic and social rights ( health, food, a healthy environment, etc..), but also, inseparably, political rights.

As villagers and NGOs who try to denounce the negative impacts of activities Perenco have much trouble to make their voices heard when they are not outright abused. Military base Kitona intervened repeatedly to prevent demonstrations against Perenco. Some community leaders found themselves imprisoned in the database, or beaten. In 2009, residents of the village of Kongo, came to protest on the terminal site Mbiale against oil pollution and the decline of their groves were sent directly to jail by the local authorities, so they thought to meet with representatives Perenco. They were released only after 24 days, no charges have ever been made. Following these incidents, the authorities tried to establish a “round table” of dialogue, but critics have quickly been excluded.

The exploitation of oil Muanda does not have at least substantial tax benefits for the country? In this area too, a lack of transparency.Several conflicting figures circulating in official documents, without it seems possible to explain these differences, let alone to assess the adequacy or otherwise of the tax contribution Perenco. The rules for reporting oil production firms are extremely lax effect in the DRC, and the means of verification zero local authorities. It seems, however, that oil royalties paid by Perenco already represent a significant portion of the national budget of the DRC. This perhaps explaining this, the management of oil business is highly centralized, fully controlled by the presidency. The content of contracts between Perenco and the Congolese state is kept secret, despite a decree of 2011 which, however, stipulates that all mining and petroleum contracts must be made public. It does not seem, in any event, that the tax oil revenues benefit Muanda.

Of course, no shortage of Perenco arise “responsible business” and to highlight various social programs put in place for the people of Muanda. Renovation of schools and roads, health work, support to local associations and economic initiative … The NGOs point out that even when real, these time costs are far from sufficient to offset the pollution caused by oil exploitation and shortcomings of the state: ” The reality and the scope of actions is very low or even zero: repainted schools without teachers, clinics without drugs, fountain installed after a river has been polluted, inaccessible cultural center for the majority of Congolese.  “

Perenco says for example you install street lighting in a village, but activists who were on the scene did not find that ”  a rudimentary table in a container and a few posts (old metal tubes)  , “the people who had to finish the installation themselves. Similarly, despite the financial support provided by Perenco local NGOs supposed to ensure the cleanliness of the city, the garbage still very visibly accumulate in the streets. The company has set up a “representative” committee to manage and oversee the allocation of funds and management of social projects, but residents complain opaque and inconsistent operation. In the end, Perenco seems especially have chosen to fund projects that benefit them most directly, such as the renovation of the airport and the road ahead, while the main avenue of Muanda and Boma Road remained in a deplorable state.

A Franco-British junior who collects controversy

Founded in 1975, Perenco specializes in the recovery of so-called “mature” fields, that is to say that the remaining reserves are estimated at less than 10% of initial reserves. But the company has gradually expanded its scope of activity. The group has enjoyed sustained growth in recent years, reaching in 2012 revenues of $ 5.9 billion and a production of around 375,000 barrels per day  [ 4 ] .According to figures released by Perenco, the DRC is only about 7% of world production, with an average of 28,000 barrels per day in 2012, behind Gabon and Cameroon neighbors (but also Vietnam and the United Kingdom) .

Unlisted company owned by the family Perrodo (16th French fortune in 2013), Perenco is exempt from any obligation to provide information and transparency on its internal organization and its finances. Its holdings are also registered in the Bahamas companies (although they have their headquarters in France and the United Kingdom). For the publication of this report, the CCFD Terre Solidaire has asked the Dutch cabinet Profundo to analyze the internal structure of the Perenco Group and various companies that compose it, from direct and indirect sources available.

It is clear from this analysis that Rep Perenco’s subsidiary Perenco holds the concession Muanda, appears nowhere in the literature or by the company, or in the organization of reconstituted by Profundo group from various sources . Or indeed any other subsidiaries of Perenco (including the Congolese state holds minority shares) in charge of operating the wells onshore and offshore . However, this chart appears in a company named Perenco DRC SPRL unknown locally but located at the same address as Perenco Rep. This structural opacity prevents traceability of financial and tax information and also allows Perenco prevent a priori any questioning of the legal responsibility of the parent company.

Is that the expansion of Perenco around the world has been accompanied by controversy. In the Peruvian Amazon, where it is present since 2008, Perenco wants to exploit oil in full jungle, near the border with Ecuador, and build a pipeline to transport 200 km to the Pacific. Charged by the Peruvian civil society to deny the environmental risks and harm to indigenous peoples, the Franco-British company is again forward his good works and denies the existence of indigenous tribes living in voluntary isolation … while preparing a guide destination of its agents who encounter (readPerenco, Maurel & Prom: the French oil companies to conquer the Amazon !) In Guatemala, for several years Perenco operates the oil Tiger Lagoon, the largest wetland area in Central America (also under the Ramsar Convention), with the support of the army and the state, to the chagrin of local indigenous populations who are progressively dispossessed of their lands, their livelihood and their culture (readPerenco Guatemala: exploit oil at all costs? ). In both cases, we find the same ingredients as Muanda.

In Tunisia, the group operates and gas fields currently used in 2010 hydraulic fracturing techniques, especially in dark conditions. The use of this technology was not then officially authorized in the country, and conflicting information circulated on the results of these tests. After initially announced that hydraulic fracturing was allowed to double the yield of the deposit, Perenco now says that the tests were inconclusive and she gave up hydraulic fracturing  [ 5 ] .

Institutionalized irresponsibility

The problems caused by oil exploitation in Muanda not they be the inevitable price of “development”? According to the report, they are rather one of the most striking illustrations of “bad development” can not fail to produce the dominant economic model in international investment. ”  The concession owned by Perenco in Bas-Congo has all the ingredients of a case study: a veil of secrecy, impunity of the undertakings concerned, environmental issues, important consequences for the development, corruption and heavy repression of legitimate attempts to challenge from local communities  , “he observed a few years ago an expert.

The report on the exploitation of oil Muanda is part of the campaign CCFD entitled ”  Investments offside  . ” This campaign aims to expose the harmful effects – in terms of environmental protection, human rights and social justice – international investment in the South. Too often, these “direct investment abroad”, presented as a panacea in terms of development by international financial institutions and Western aid agencies, are only a means for multinationals, as Perenco, to expand their markets, without any concern for local populations. CCFD-Terre Solidaire believes that only the introduction of new rules will ensure that private investment actually contribute to the development of the poorest countries.

Poor governance, inadequate national and international legal system and (often) the cynicism of companies combine to ensure that multinational groups with almost total impunity for their social and environmental impact, and also the minimum that easy to circumvent tax obligations . In this case, Perenco relies on various good works to pose as “responsible” company. At the same time, there is evidence that it continues to exploit the slightest flaws in legislative and policy framework in place to maximize profits and reduce costs, without feeling bound by any ethical consideration other laws that the political authorities concerned fail to enforce. Despite his good works, the company has made (or made public) no study of social and environmental impact, not claiming any certification program or “best practices” as it exists both in the sector extractive, and has no plan in place risk prevention and no repair mechanism. Taking advantage of Congolese law and the Bahamas where its headquarters are based, it does not publish either financial, social and environmental information on its activities.

Certainly, the questioning of the role of Perenco can not lead to clear the Congolese state of its inefficiencies and inability to protect its population, to establish appropriate rules and enforce them. But, as pointed out by the authors, the effectiveness of the responsibility of multinational companies involves both host countries of their investments – by the DRC – those where these businesses are located.Countries of origin – namely France and the United Kingdom – must also impose obligations on “national” companies and provide victims with means of redress. But it is clear that progress in this area remains extremely modest, both in legislation and in government discourse.Even the new obligations of non-financial reporting passed in 2010 – still awaiting implementation decree – were gradually emptied of their substance. On other issues, such as financial reporting countries and the responsibility of the parent companies, the French government has kicked into touch by shirking on the European Union – which has earned him the wrath of the civil society . The only glimmer of hope, the proposed law on the liability of multinational firms recently filed by some French MPs.

Legislation to regulate oil exploration and exploitation in the DRC

If today the exploitation of black gold remains confined in Bas-Congo, concessions are under exploration in other areas of the country, particularly in the central basin and the region of Lake Albert, on the border with Uganda. These concessions were granted to a number of firms “pioneer” as Anglo-Saxon Soco, Heritage Oil and Tullow Oil and a plethora of small unknown companies, further characterized by their political accomplices that their expertise in the oil industry  [ 6 ] . It is only more recently that larger multinational oil companies – mainly French group Total and the China National Offshore Oil Corporation (CNOOC) – have committed in the country. Perenco itself wants to expand into other districts of Bas-Congo, including in the agricultural zone of Moyambe traditional breadbasket of the region. In total, the estimated oil reserves of the DRC now reach 3 and 4 billion barrels – incommensurate, therefore, with the modesty of the current production of Perenco.

The case that most headlines is that of oil exploitation of Virunga National Park, Africa’s first Natural Park (established 1925) and the last refuge of mountain gorillas. The contours of the park largely coincide with areas of exploration around Lake Albert and Edward, where armed groups are still active. To date, the only company that openly plans to explore for oil inside the Virunga National Park is the UK Soco.It invokes the blessing of the Congolese government and states have implemented all necessary safeguards to ensure that its activities do not have a negative environmental impact. That was not enough to convince the WWF – though not the most radical environmental NGOs when it comes to multinational corporations – who entered the “national contact point” British OECD for violation of the principles of this institution on corporate responsibility. Following mobilization of the Congolese and international civil society, Total has promised, however it would not seek to exploit oil in the corresponding portion of its concession to the national park.

Beyond the case of Virunga, many observers fear that, with the lure of oil wealth, a resurgence of civil conflict and violence which accompanied recent years. The eastern provinces of the country have experienced extreme forms of violence in connection with the civil war and the exploitation of local mineral resources (tungsten, tin, gold and tantalum). According to the International Crisis Group, which in 2012 devoted a report on the issue , the oil sector in the DRC in danger of becoming ”  a battleground between local and foreign interests against the backdrop of inadequate legislation, financial opacity and presidentialization a strategic economic sector. Similarly, the absence of institutionalized dialogue with civil society and the government’s refusal to decentralize dialogue, prevent provinces and communities where hydrocarbons are present directly benefit from these revenues, which only fuels resentment and undermine greater national cohesion . ” The risks are even stronger than most of the potential oil reserves of the DRC border (with Angola to the west, with Uganda, Tanzania and Burundi to the west). The fact that some oil companies such as Total (from both sides of Lake Albert in Uganda and the DRC, and in Tanzania on the shores of Lake Tanganyika), are present on either of the borders seems suffice to appease the spirits  [ 7 ] .

Scalded by corruption and human rights abuses that seem to have always accompanied the exploitation of the wealth of the Congolese soil and subsoil, civil society in the DRC – meeting within the network resource (NRN) – advocates for adoption of a framework law on hydrocarbons that would bring more transparency and safeguards in terms of participation of the people in line with international standards. Indeed, the DRC has not yet adopted this day a true petroleum code (as opposed to what is in the forestry and mining areas), and the sector is still governed by texts dated and incomplete which have no place in social and environmental issues. The Presidency monopolize decision-making power, and opacity vies with inconsistency. ”  Where some see a legislative delay or an unfortunate oversight, organizations of Congolese civil society rather see will continue to leave an exceptional regime, managed for the exclusive benefit of a few.  “A new law proposal was filed in March 2013 to regulate the sector, but it still has serious shortcomings in terms of transparency, publicity impact studies, and repair mechanisms.

DRC has certainly engaged since 2005 in the voluntary process of the Initiative for Transparency Initiative (EITI) – a small but relatively consensual at major international public and private actors approach.But the process is very laborious, since the country has been accepted as a candidate in 2005, and the date of its full accession to the EITI has continued to be repelled. This is due to the repeated publication in the annual financial reports that each member is required delays.

In any event, participation in the EITI can never substitute for the adoption of a real framework law on hydrocarbons, such as dream Congolese civil society, the only way to ensure full transparency and complete  [ 8 ] . Again, recent standards adopted in Western countries could play a catalytic role despite their shortcomings – including the recent EU directives on accounting and transparency forcing large companies to report payments to States, which should normally apply to Perenco. And most importantly, financial transparency will only be the first step. Will remain to ensure that decisions on the exploitation of Congolese oil and its social and environmental impact will be taken in a democratic manner, weighing the costs and benefits and that these benefits will actually be distributed equitably to the people of the DRC .

Photos: © UNEP © CCFD-Terre Solidaire

1 ]  Perenco claims that these boxes were built after the wells were drilled.

2 ]  According to some sources, some locals would not hesitate in effect sabotaging themselves conducted in the hope of earning a little money, as Perenco customarily engage local residents to perform cleaning …

3 ]  The company involves the lack of skills of the local workforce, who also contraindraitt recruit most of its executives.

4 ]  For comparison, the total daily production in 2012 was 1.22 million barrels per day, the Exxon 2.18 million barrels per day.

5 ]  On these facts, see here and here .

6 ]  See the report published by the NGO Platform on the question: Oil at Lake Albert. Revelation Congolese disputed contracts .

7 ]  In Uganda, Total is also a potential candidate for the construction, via a public-private partnership (PPP), a refining plant oil from Lake Albert. Uganda would like this plant also treats the Congolese oil, but the DRC feared too much dependence on its neighbor.

8 ]  We also note that Yvonne Mbala, “representative” of Perenco in Kinshasa headquarters elsewhere in the Executive Committee of the EITI DRC on behalf of oil companies.

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