SA oil companies to get piece of the action in Republic of Congo reserves

12 April 2010, Business Report
URL: http://www.busrep.co.za/index.php?fArticleId=5423818&fSectionId=552&fSetId=662

Johannesburg:  South African oil companies will get a piece of the Republic of Congo’s rich oil reserves. The president of Congo-Brazzaville, Denis Sassou-Nguesso, made this announcement in Pretoria last week. He also used the joint press conference with his South African counterpart, Jacob Zuma, to put in a plug for South African farmers to break soil in his country.

"We have opened up the market to South African companies to get oil permits and come and operate in Congo," Nguesso said.

Equatorial Guinea has eclipsed Congo as Africa's biggest oil exporter after Nigeria, Angola and Gabon.  It has proven reserves of 2 billion barrels, about 0.15 percent of the world's reserves. It also has the fourth-largest proven reserves of natural gas in sub-Saharan Africa. Congo exports 222 000 barrels of oil a day, according to statistics from major oil producers.

Oil and oil-related products dominate the country's industrial sector. Oil provides Congo with 90 percent of its export earnings. It comprises most of the country's revenues and exports - 67 percent of its gross domestic product.  Annually, oil revenues make up between 60 percent and 80 percent of Congo's government budget. Oil is badly linked to the rest of Congo's economy, mostly comprising village agriculture and the urban informal sector.

The Congo leader said his country presented "immense possibilities for agricultural development".

"Today we exploit only 2 percent of our available agricultural land. So the land is available and we have lots of water. We can build irrigation programmes and there is more than enough sunshine."

South African farmers have been offered 10 million hectares in Congo, the organisation Agri SA said.  They are required to farm maize or soya, or to establish poultry or dairy farms.  For this they will get 99-year leases, a five-year tax holiday and customs-free agricultural imports.

Sassou Nguesso was generous in his praise of the host country.  "We cannot think of our strategic relations with China, India and Brazil without including South Africa.  Africa must accept South Africa's leadership role on the continent. You have the capacity and you liberated yourselves to make the whole of Africa free."

The countries signed agreements on economic co-operation, maritime transport and arts and culture. They also revived the joint commission agreed on in 2003, but never made operative. South Africa will host this body's first meeting later this year.  "Things will never be the same with Congo again," Zuma said at the media conference. "South Africa will be part of the action in the Republic of Congo. We are ready to work to improve bilateral relations.  We have identified the issues facing us and we are ready to take the necessary action to benefit both our countries."

Two-way trade will be increased from a very low base of R500 000 a year, according to South African figures.  This weighed heavily in South Africa's favour, with exports of juice, fruit, vegetables, vegetable oil, chemicals, plastics and cellphones.

*  Published on the web by Business Report on April 11, 2010.