The Democratic Republic of Congo is offering crypto firms an opportunity to bid for oil and gas exploration areas.
This auction comes as western governments desperate to shore up additional oil production call on the African nation to boost its output.
Minister of Hydrocarbons Didier Budimbu said that auctioning off the exploration areas could generate the income necessary for building schools, offices, and road infrastructure. He added that it was his nation’s prerogative to exploit its natural resources as a sovereign country.
The central African nation has concentrated its oil and gas operations on exploration blocks lining its west coast. It produces about 25,000 barrels of crude oil per day.
Calls for greater output came after U.S. president Joe Biden visited Saudi Arabia in the wake of the Russia-Ukraine war to convince leaders to pump more oil. Corruption and environmental concerns held back further exploration in the DRC.
But now, the hydrocarbons minister says nothing will stop the country from auctioning off tracts of environmentally significant land in the Virunga National Park and a major carbon sink, the Curvette Central.
Flowcarbon creates RedemptionDAO to bid for DRC exploration block
While the auction is geared toward oil and natural gas giants, Budimbu said that the country would accept bids from crypto and carbon-credit firms provided the companies had reliable financial support.
Flowcarbon, a company co-founded by disgraced WeWork co-founder Adam Neumann, is interested in the project. Flowcarbon aims to issue tokens to companies purchasing carbon credits, which can be burned when a company retires its credits. Last month, the company announced a delay in the token launch due to current market conditions.
Project developers issue carbon credits to major companies looking to offset their carbon emissions. The sale of one carbon credit is a pledge that the company removes or prevents one metric ton of carbon from entering the atmosphere.
With the DRC block auction in mind, Flowcarbon amassed staff and resources to operate RedemptionDAO, a decentralized autonomous organization dedicated to buying an auctioned block for issuing “avoided emissions” credits. While the DAO hopes to raise $50 million, it has thus far amassed only $2.57 million with $74,000 in pledges. Contributions and pledges were made in USDC, a type of crypto stablecoin pegged to the U.S. dollar. The DAO has until February 2023 to raise funding.
Companies bidding for land could face cash flow problems
While Flowcarbon was an early proponent of carbon-credit tokenization, no precedent exists for bringing avoided oil and gas exploration credits to market. According to analysts, developing such a method could take up to two years. Furthermore, one analyst pointed out that companies involved in the business could soon face cash flow problems, considering the high cost of acquiring blocks.
KlimaDAO and Toucan Protocol Association began tokenizing carbon credits in 2021, creating a supply-and-demand market with greater price transparency.