Windhoek - While discoveries of crude oil are supposed to be a precursor to greater economic prosperity, this is not likely to be the case for the Democratic Republic of Congo.
Risk analysts warn that recent oil strikes could fuel further internal strife.
If not well-managed, oil discoveries in the vast and richly mineral-endowed DRC could worsen the country’s resource-driven conflicts, especially in the volatile eastern districts.
DRC’s oil discoveries are also likely to further ignite more conflicts with the country’s eastern neighbours such as Uganda, Rwanda and Burundi.
A seemingly unending rancorous border dispute near the western border with Angola could also escalate if the two countries fail to agree to demarcate geographical boundaries.
This is the conclusion of researchers and analysts at the Brussels-based International Crisis Group (ICG).
Major oil finds have been made on the Ugandan side of the Lake Albert region and recent exploration shows that the oil-bearing strata extend into the DRC.
The ICG analysts say potential oil reserves straddle the DRC’s borders with Uganda and Angola and could fan the flames of instability.
“In the context of a general oil rush in central and east Africa, the lack of clearly defined borders, especially in the Great Lakes region, poses significant risk of maintaining regional stability,” ICG analysts say.
For the Kinshasa administration, new oil reserves in the east pose a headache as it will likely create two centres of power and affect the political influence of Katanga, the DRC’s economic hub.
Deep-rooted conflicts in North and South Kivu and fighting between government forces and a militia group calling itself M23 complicate peace efforts.
“Although it should provide development opportunities, renewed oil interest in the DRC presents a real threat to stability in a still vulnerable post-conflict country.
“Exploration has begun, but oil prospecting is nurturing old resentments among local communities and contributing to border tensions with neighbouring countries,” ICG says.
“Moreover, confirmation of oil reserves in the central basin and the east could feed secessionist tendencies,” the analysts warn.
The analysts add, “Amid deteriorating security and heavy presence of armed groups in the east, border tensions with Angola and Uganda, and lack of real reforms, an oil rush presents more of a threat than an opportunity.”
They trace the problem to the DRC’s inherited colonial borders, which are not well-defined.
These boundaries have resulted in Angolan oil blocks surrounding DRC territorial waters.
This has led to Kinshasa claiming a proportion of oil extracted from deepwater Angolan production blocks.
Angola is in turn claiming that illegal production of diamonds by Congolese prospectors in its northern provinces cost the country between US$350 million and US$700m annually.
The DRC in turn says Angola owes it US$650m in oil revenue. Angola has ramped up oil production in the disputed blocks to 1.7 million barrels per day.
Just like with Angola, the border dispute with Uganda is also long-running and centres on Lake Albert, which is in the restive Ituri District.
Since 2003, Lake Albert’s oil has been the source of violence in Ituri and one of the reasons for Uganda’s alleged repeated military incursions into DRC territory.
Oil companies working on the Ugandan side face accusations of “stealing Congolese oil”.
On the Ugandan side, oil production is expected to come on stream in 2014.
The demarcation of Lake Albert became a flashpoint after the discovery of oil.
The DRC allocated oil blocks to investors for exploration in 2010.
The country awarded Block 5 to Soco International and Dominion Petroleum to conduct exploration drilling on Lake Albert.
On the Ugandan side of Lake Albert, Dominion was also awarded Block 4B.
The DRC’s Block 5 is located in north Kivu and 52 percent of it is in Virunga National Park, a national heritage site.
Moreover, DRC’s Block 5 is in the Rutshuru and Lubero districts, the natural bases of most militias and the epicentre of armed conflicts.
“Relations between DRC and Uganda remain plagued by mutual accusations and distrust, and Kampala is unilaterally tightening security on Lake Albert, which may heighten tensions,” ICG says.
The DRC government forces and Rwandan Armed Forces reportedly clash on a regular basis in the area.
There is another armed group, Allied Democratic Forces (ADF) which is also active in the oil fields, but on the DRC side.
Away from Lake Albert, there are other geological basins, which are believed to hold crude for the DRC.
Lakes Edward, Kivu and Tanganyika are also natural borders while the central basin shares borders with Congo Brazzaville and the Central African Republic.
Renegade General, Bosco Ntanganda and his M23, which comprises mutineers from the Congolese army, took control of Rutshuru early July.
“In an area where the illegal extraction of natural resources thrives, security remains highly precarious as discovery progresses,” ICG says.
“The oil sector could also play a pivotal in improving the country’s dire development conditions, but this prospect is elusive. Nine years after civil war ended, the DRC remains fragile, the government has no control of some parts of its territory and exerts little or no authority over some factions in the army.
“Governance remains eminently problematic, notably in the oil sector, despite reform efforts.”
The ICG warns that the DRC’s oil sector is not well-regulated, as it is still being governed with legislation put in place in 1981.
Furthermore, oil exploration risks weakening national cohesion as allocation of exploration rights raises expectations and arouses fears and distrust among rival politicians and local communities.
“In an area subject to chronic insecurity for years, where the roots of conflict are far from being eradicated and illegal exploitation of natural resources thrives, oil exploration can only exacerbate local rivalries,” ICG says.
The lack of legislation compelling companies to share proceeds with local communities is another potential source of conflict, analysts warn.
Add to this North and South Kivu’s historical grievances with the Kinshasa administration and the situation could not be much worse.
“These areas have for years been the scene of Congolese army operations, with and without MONUSCO (UN) support, against the militias, which nonetheless remain present and active as demonstrated by the recent offensive of the M23.”
The DRC army is struggling to deal with rebel activities, while “internal corruption and inadequate logistics has made the army a liability and threat to national security as demonstrated by Ntanganda’s mutiny”.
“If oil reserves are discovered in eastern Congo, these high risk areas can expect an exponential growth in racketeering and predatory schemes.
“The dispute between the provinces and Kinshasa about fiscal decentralisation continues to nurture the periphery’s grievances against the centre … if exploration in the east leads to further discoveries, the country’s economic geography will be profoundly transformed and, consequently, so will its internal geopolitics.
“The demands for autonomy already expressed during the war of the eastern provinces (Ituri, north and south Kivu) could easily be revived,” ICG says.
The group says DRC should strive for a transparent oil sector, postpone oil exploration until border demarcations and territorial rivalries are sorted out and have in place effective legislation to regulate the sector.