Fleurette Group (Fleurette) today makes a statement to clarify its involvement in Nessergy and to update the market on the current status of the project.
Transfer of Licence to Sonangol and Cohydro
In April 2013, DRC Minister of Hydrocarbons, Crispin Atama confirmed that Sonangol EP, Angola’s state oil company, and Cohydro of Democratic Republic of Congo (DRC) will jointly develop block 14C, also known as ZIC. He issued a decree that will transfer the PSC rights from Nessergy to Sonangol and Cohydro. Mr. Atama stated at the time that the transfer of rights will allow DRC to negotiate a new PSC which will benefit the DRC in developing the ZIC with Angola through their respective national oil companies (Sonangol and Cohydro).
In this context, Sonangol has agreed to compensate Nessergy for the sale of its rights in the ZIC which are destined to be transferred to Cohydro on condition that a new PSC is for the ZIC development. This deal is still pending and conditional on the two countries and their respective oil companies reaching an agreement on a new PSC. While the compensation fee is commercially confidential, speculation over a figure of $400m is wildly inaccurate.
Value to the DRC
The Congolese State will benefit significantly from the rights on the ZIC Area: an NPV between USD$1.3 and 3.6 billion will be generated by the future Joint Operations of Sonangol and Cohydro. To this amount should be added other cash considerations (i.e. signature bonus) that could be paid by the foreign Companies operating on the Block. Last but not least Cohydro will have, on 50% of the Block, the role of the Concessionaire, holding a valuable and bankable title. All this value has been made possible due to Nessergy’s role in helping create and develop the ZIC.
The value of the Blocks increased over time due to a number of factors including : the signature of the ZIC Agreement (July 2007) in which Nessergy played a key role, thereby unleashing (potentially) significant value for the DRC, and second the discovery of the Menongue field which occurred after October 2006. In addition to these two events the international oil price changed dramatically from 55 $/bbl in Oct 2006 to110 $/bbl today, when the sale transaction has been finalized.
Background to Fleurette’s involvement
Fleurette hold substantial rights in Nessergy which obtained rights for 95% of the 50% rights that the Democratic Republic of Congo (DRC) had under the Zone d’Intérêt Commun (ZIC – or Zone of Common Interest) agreement with Angola.
The oil rights were granted to Nessergy in October 2006 by a contract (PSC) signed by the Ministries of Finance and Hydrocarbons. The PSC received the Presidential approval, which is the only act that makes the PSC effective, in March 2008. The PSC is similar to many others approved in the DRC, the signature bonus is in line with DRC basic requirement and had to take into account the limited extension of the Block and the difficulty of operating an ultra-deep offshore Block.
The remaining 5% belonged to Cohydro – the DRC’s state oil company. Nessergy, as of today, has no oil rights in the ZIC offshore area. Nessergy is a Fleurette entity. For clarity and for the avoidance of doubt, no official or authorities have any right, legal or beneficial interest in Nessergy whatsoever.
As is standard Fleurette paid US$500,000 as a signature bonus to have its Production Sharing Contract ratified, alongside two other listed oil companies, SOCO and Energulf. Separately, as per the terms of the PSC, other fees were paid for tax, professional contributions to national gas and oil work, training and an exploration permit for production.
This agreement set the grounds for both Angola and the DRC to accelerate the negotiation of a new PSC that will benefit the DRC and allow the Country to more than double its oil production in few years. This will enhance the DRC strategic program to move deeper into exploration and exploitation of oil and to enhance its effort in this field. ZIC is known for its proven reserves and can enter into exploitation phase within 36 months. According to the ZIC agreement, all reserves shall be equally divided by Angola and DRC. This will create substantive revenues for the DRC in a relatively short time period. This would not have been possible without the involvement of Nessergy.
Peter Ogden firstname.lastname@example.org +44(0)207 379 5151
About Fleurette Group
The Fleurette Group is an entrepreneurial business with significant investment in diverse sectors, including natural resources, agriculture, and technology. Fleurette has a proven track record of co-operation with other businesses, including the state-run mining company Gecamines. Fleurette specializes in successful industrial projects in high-risk environments. It is an active, full-scale planner in each venture, providing everything from managerial expertise to engineering consulting to financial planning, and ensuring the on-time and on-budget completion of each project. In January 2014, Fleurette joined the EITI (Extractive Industries Transparency Initiative), a global initiative to improve governance in resource-rich countries through the verification and full publication of company payments and government revenues from the oil, gas and mining industries.
A Leading Employer, Investor and Taxpayer
As one of the largest private companies in the country, the Fleurette Group has invested over $1.5 billion dollars in the acquisition and development of mining and other assets in the DRC. Through its ongoing commitment to the country’s economy, Fleurette has helped to bring billions in related investments into the DRC. By bringing billions of dollars in private investment to the country, the Fleurette Group’s subsidiaries and partnerships support some 20,000 jobs in the DRC, making the company one of the nation’s leading employers. Moreover, the Fleurette Group’s partnerships and joint ventures are amongst the DRC’s leading taxpayers, contributing significant revenues to the States in 2012. These tax payments help to support basic public services, such as schools, roads, and health clinics.
A Long-Term Commitment to the DRC
Dan Gertler, Senior Advisor to the Fleurette Group, began investing in the DRC’s diamond sector in 1997, at a time when few other international companies were willing to risk doing business in the war-torn nation. Over the past decade, the Fleurette Group has expanded from iron ore, copper and cobalt to agriculture, oil and gas. A citizen and resident of Israel and the DRC, Gertler is committed to developing the natural resources of the country, while investing in the Congolese people and their communities.
The Largest Charitable Organization in the DRC
Through the Gertler Family Foundation and its own infrastructure and social welfare projects, the Fleurette Group has contributed millions of dollars to the betterment of the DRC and its people. These charitable ventures focus on core areas that include health, education, infrastructure, emergency assistance, food security, and cultural development.