* Firms that won Congo’s Blocks 1 and 2 owned by Swiss-administered trust
* Companies have spent $9 mln, exploration drilling in 2011
* Local groups fear instability, want state share hiked
(Refiles to clarify in bullet point that trust is administered in Switzerland)
By Katrina Manson
KINSHASA, Aug 16 (Reuters) - Two offshore companies awarded contested oil blocks in eastern Democratic Republic of Congo said they will start on the development programme ahead of target and that it was not the right time to identify their underlying investors.
In July, Congo President Joseph Kabila signed decrees giving Lake Albert’s Block 1 and 2 that lie alongside Uganda’s oil-rich frontier to two companies named Caprikat and Foxwhelp, which are registered in the British Virgin Islands and claimed by Khulubuse Zuma, nephew of South African President Jacob Zuma.
“We have already paid $9 million for the signature bonuses, exploration licences and other contributions,” said Giuseppe Ciccarelli, head of Swiss-based Medea Development SA, a technical consultant to the blocks and authorised to speak for the companies.
“We have 18 months to complete all the preliminary work, but we are going to conclude well before that, I think in 12 months,” he told Reuters in an interview late last week.
Seismic surveys and other preparatory work are set to start this year and cost about $4 million, with the first exploration drilling to start next year and run into 2012, Ciccarelli said.
He said the companies would also spend up to $3.5 million on social works including tarring a road, a hydroelectric plant and improved water supply for the local community.
“Nobody could say we are not doing well — in four weeks we have done something that nobody did for the last three, four years,” said Ciccarelli, who said an environmental impact study would meet international standards.
Ciccarelli said the offshore companies are owned by a trust administered in Switzerland and are setting up a local company named Oil of Congo, a joint venture in which the two companies will have 85 percent and the state 15 percent. In an unusal arrangement, state oil company Cohydro has no stake in the deal.
“A trust started Caprikat and Foxwhelp ... they are financial and industrial investors,” said Ciccarelli.
“It is not the right time to say who the investors are,” said Ciccarelli, who regularly visits Congo and is establishing a team of four expatriates to do the geological survey work.
Geneva lawyer Marc Bonnant, who is the legal representative of the two companies and administers the trust, according to Ciccarelli, signed power of attorney over to Khulubuse Zuma for Caprikat and to South African lawyer Michael Hulley for Foxwhelp, in documents seen by Reuters.
Neither Zuma nor Hulley have shares in the firms, Ciccarelli said.
Social activists in the region have complained that the contract is opaque and say they fear oil could become a source of conflict in the unstable region, which is home to several residual armed groups.
In a declaration dated July 29 and addressed to President Kabila, the Ituri Civil Society (SOCIT) group also complained of ambiguity over the investors’ identity and called for an increase of the state share to 30 percent from 15 percent.
The firms have acted swiftly since beating Britain’s Tullow Oil (TLW.L) and South African consortium Divine Inspiration Group, which was backed by state oil company PetroSA, to the two blocks.
Both of the rival companies paid signature bonuses but had been waiting years for presidential ratification and have since been told to seek reimbursement by the ministry of hydrocarbons. Both say they have rights to the blocks and are considering legal action.
Sources close to the discussions say Italian oil major Eni (ENI.MI) is seeking an interest in the two blocks, and this month was granted authorisation by the state to access data to oil blocks including those of Lake Albert’s Block 1 and 2. [nLDE67F0MV]
Ciccarelli, who used to work for Eni, said the Italian oil giant was clearly interested in Congo’s potential but had made no approach to Caprikat or Foxwhelp.
Editing by Daniel Magnowski and Jane Baird