Changing fortunes? F R I C A
A
Somal ia
geological formations as Somalia, as well as other areas in eastern Africa. As a result, there has been a flurry of
mapping and seismic surveys by various foreign oil companies in Puntland and the Republic of Somaliland in a bid to strike oil – security in these breakaway zones is sig- nificantly better than in the rest of the country. Leading the pack is Canadian company Africa Oil Corporation, which has acquired rights to the Dharoor Valley block (28,376 sq km) and Nugaal block (49,436 sq km) in Puntland. According to Patrick Nyoike, Kenya’s Energy Ministry Permanent Secretary, these two blocks are extensions of Mesozoic oil-bearing basins in Yemen, stretching to, along and beyond the Somali-Kenya coastline. But it is not just western oil companies
Classified as a failed state, Somalia is one of the world’s poorest countries. However, the politically fractured country may contain significant oil and gas reserves and is being touted as a potentially rich producer, reports Wachira Kigotho in Nairobi. Furthermore, Somalia is increasingly regarded as economically strategically- located – a view fuelled by recent interest by Chinese and western nations’ oil and gas investment companies.
U
nder the surface of Somalia’s chaotic image, quiet diplomacy over oil exploration concessions
persist between Somali factions and rep- resentatives from various foreign govern- ments working both formally and informally on behalf of their oil and gas companies. Countries whose delegations last year visited the battle-scarred capital Mogadishu, or other key towns in the breakaway Puntland region and the Republic of Somaliland in the north, to discuss oil matters included China, Canada, Indonesia, Kuwait and Malaysia. Meanwhile, many western oil companies which held concessions in Somalia before civil strife broke out in the early 1990s are eager to return, industry sources have told PetroleumReview. According to Mohamed Ali Nur,
Somalia’s envoy in Nairobi, Somalia’s tran- sitional
federal government has
embarked on a comprehensive strategy to allow foreign oil companies which left the country in the 1990s to return. ‘New legislation is being discussed by parlia- ment to let foreign companies resume operations,’ he stated.However, there are jurisdictional problems. Nur stressed that
the new legislation would not recognise agreements made by the Puntland and Somaliland administrations (or, indeed, any other organisation claiming public authority) in the years since Somalia lost an effective central government. ‘Any right to conduct petroleum operations in Somalia granted after 30 December 1990 shall not have a binding obligation on the government,’ he said in an interview in Nairobi. Although there are no proven signifi-
cant hydrocarbon reserves in Somalia at present, the potential for major finds is recognised. The country borders the Gulf of Aden, south of the Arabian peninsula, which has huge oil deposits. According to Dr Mohamud Arush, a senior lecturer at the Department of Geology, University of Toronto, Canada, the petroleum bearing sedimentary rock system of the Arabian peninsula extends to Somalia, Kenya and eastern Ethiopia. ‘Somalia possesses all the requirements of a petroleum bearing province,’ he said. In a study presented to the Canadian Society of Petroleum Geologists, Arush noted that hydrocar- bons of commercial value were discov- ered in nearby Yemen, which has similar
Civil war has reduced demand for oil and gas in Somalia, but there are still reserves available, if peace can be secured
Source: United Nations
making plays. The China National Offshore Oil Corporation (CNOOC) has made progress in securing oil and gas exploration licences in Puntland, Somaliland, Ethiopia and
Kenya.AChinese diplomatic effort has been ongoing in Hargeisa, the capital of the Republic of Somaliland, backing CNOOC and its partner China International Offshore Oil & Gas. The goal – acquiring rights to a potential petroleum bearing block inMudug province located in north- central Somalia (outside Somaliland). Nairobi sources told Petroleum Review
that the concession originally belonged to ConocoPhillips before Somalia became embroiledinarmedconflict. ‘TheChineseare out to challenge American and other western oil companies that were allocated most of the oil potential concessions before the collapse of the President Siad Barre regime in 1991 that forced foreign compa- nies toabandonoperations,’ thesources said. Chinese interest in the concession began
in 2005 via an oil-prospecting contract in the Mudug area signed with the Somalia transitional federal government. However, the contract could not be executed because the Republic of Somaliland con- sidered Mudug an independent state and did not recognise Mogadishu’s authority. Last year, the Chinese switched strategies and made direct contact with Hargeisa authorities towoo their acquiescence. Although it is not clear whether the
breakaway province will support Chinese interests, Somaliland President Ahmed Mohamed Mohamoud Silanyo was sched- uled to visit Beijing last month and oil- prospecting by Chinese companies was expected to be top of the agenda. According to Nairobi energy experts, recent Chinese delegations to Somalia and neighbouring countries have included offi- cials fromCNOOC. A US State Department confidential
report on Somalia published in October 2010 noted that the absence of an effec-
14 PETROLEUMREVIEW APRIL 2011
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