US regulator probes Angolan deal
US regulators are probing an Angolan oil deal in which BP and a Texan partner agreed to pay $350m to fund a research centre that has yet to materialise.
New York-listed Cobalt International Energy disclosed in a regulatory filing this week that the Securities and Exchange Commission, the stock market watchdog, had “initiated an informal inquiry” into the payments and whether they violated anti-corruption laws. Under a December 2011 deal to secure rights to explore for oil under southern-Africa’s oil-rich seabed, Cobalt and BP agreed jointly to make $350m in payments in instalments over four years to pay for a centre run by Sonangol, the Angolan state oil group.
The anti-corruption campaign group Global Witness and others have queried the research centre project, pointing to the fact that scant progress appears to have been made five years after the payments started to flow. Anti-corruption activists have raised questions about the cost of the research centre. Cobalt mentioned the inquiry in the section of its earnings filing that warned of risks to the company under anti-corruption laws. The company said officials from the SEC called the company on Monday to tell it about the probe and had requested information related to the inquiry. The Houston-based company said: “We believe our activities in Angola have complied with all applicable laws, including the Foreign Corrupt Practices Act, and we will co-operate with the SEC’s inquiry.” BP said: “We understand from Sonangol that the [research centre] is still in the planning stage.” Cobalt did not comment beyond the details in its filing. Sonangol did not respond to a request for comment on the status of its research centre. The SEC declined to comment.
Cobalt is the operator of the project, known as Block 20, and holds a 40 % stake in it. BP holds 30 %, with the remaining 30 % held by Sonangol. The payments for the research centre were agreed alongside a “signature bonus” - a standard practice in the oil industry in which energy groups pay hefty one-off fees to governments in exchange for rights to prospect a given parcel of territory for oil. Under the deal for Block 20, which lies to the south of BP’s prodigious Greater Plutonio project, Cobalt and BP agreed to pay a $7.5m lump sum and $200m for social projects on top of the $350m for the research centre.
In 2016, the Norwegian oil group Statoil said it had held discussions with Norwegian police about $50m that it had paid towards the research centre. Statoil said the payments were legitimate and the police said at the time they were not launching a criminal investigation. Statoil told the journalists this week that it had not been contacted by the SEC. “We continue to follow up with Sonangol” on the progress of the research centre, it said, adding that the Angolan group had told Statoil the planned centre would be built in the city of Sumbe, south of the capital, Luanda. Cobalt struck oil at Block 20 in 2014 and has since drilled more exploration wells, with varying success. The exploration lease agreed in 2011 expired at the start of this year and Cobalt says the authorities are weighing an application for an extension.
This is not the first time that US authorities have taken an interest in Cobalt’s Angolan operations. In February US prosecutors dropped a five-year corruption investigation stemming from revelations that Cobalt’s local partner in a separate Angolan oil deal had been secretly owned by some of the country’s most powerful officials. The SEC had already dropped its parallel investigation. Cobalt denied wrongdoing throughout. In 2015 Cobalt reached a deal to sell out its interests in Angola to Sonangol for $1.75bn but the agreement fell through.