Tullow Oil is due to meet representatives of the Congolese government this week amid reports that the group is about to lose its exploration licence in the Democratic Republic of Congo.

The company, which has several licences to search for oil around Lake Albert on the Congolese/Ugandan border and has discovered oil in all six of the wells drilled on the Ugandan side, insists that there is no problem with the licence and that there are no legal grounds for it to be revoked.

However, the new Congolese minister for hydrocarbons, Lambert Mende, is objecting to the granting of the licence, which gave Tullow a 49 per cent stake in two blocks as part of one licence. It is believed he is unhappy because Tullow was only required to pay one signature bonus of $500,000 (€372,000) even though the licence covered two blocks.

Analysts were largely unconcerned by the threat yesterday as most of the valuations do not include the Congolese licence. Tullow's shares rallied after falling on Friday when the news first emerged that the contract might be contested.

Still, Caren Crowley, an analyst at Davy, said the dispute highlighted the political and fiscal risk in parts of Tullow's portfolio. If the Congolese licence were to be revoked, its strategic foothold in the Albertine Basin would be weakened, she said.

Tullow, originally an Irish-registered company, has put significant weight on its African exploration portfolio, and in particular the Albertine Basin area, even saying it expects to start producing oil in Uganda within two years.

In March it said reserves in the area may be as much as 250 million barrels, making it Tullow's biggest oil project.

On the Ugandan side of the lake, Tullow owns all of one block and a 50 per cent stake in two others operated by Heritage. In the Democratic Republic of Congo, State-owned CoHydro is a participant in the licence.