Kilimanjaro Capital Enters Somalia
Tuesday, October 1, 2013
Kilimanjaro Capital entered into a farm-out agreement with the Australian-Somali company Amsas to obtain a 5% non-working interest in the Amsas-Coriole-Afgoye (ACA) Block in Somalia. The company also has the opportunity to earn an additional 5% each in an additional three Somali blocks.
The ACA Block is located on the coast of Somalia and was formerly known as the Government Block. Amsas obtained 49% of the block in 2008 from the Somali Transitional Federal Government (TFG). The ACA Block is a 4,700 sq km coastal parcel directly onshore opposite the offshore Block M-7, which was once held by a Shell unit. Amsas estimates expect the block to contain 1 billion boe, while optimistic estimates anticipate 5 billion boe.
The block has a history of promising exploration. Test bores drilled in the 1960s by Sinclair Oil were followed by Somali Government drilling in 1985. Just 40 km south of Mogadishu, about 200 Bcf of gas was discovered before the civil war stopped all activity in 1991. There has also been terrorist activity in the area and Amsas and its other partner Tembo have had to deal with incursions by Al Shabaab, which has claimed responsibility for the Nairobi Westgate Mall atrocities.
Kilimanjaro’s role is to utilize its unique structure to obtain the financing necessary for the ACA Block to begin exploration on the ground leading to the drilling of the first exploration well.
According to Kilimanjaro CEO Zulfikar Rashid ,the ACA Agreement plays to Kilimanjaro’s strengths in African frontier markets: “We are pleased to be working with a Somali owned company and in particular it’s CEO Dr. Ali Abdullahi. This is African economic self determination in progress which will ultimately benefit the people of Somalia by providing an economic base and jobs. Only through economic development that benefits the people of Somalia will we defeat extremism and terrorism.”
Amsas also possesses the right of first refusal, obtained from the Somalia government, for another three unclaimed blocks of its choice within the borders of pre 1991 Somalia. The choice would include blocks once allocated by the Somali Democratic Republic to ENI, Chevron, ConocoPhillips, Pecten and Amoco and potentially overrides claims by relative newcomers such as Africa Oil, Ophir, Asante, Maruader and Range Resources granted licenses by regional administrations such as Puntland and Somaliland.
Kilimanjaro anticipates supporting Amsas’ bids for other blocks legally and financially and using both conventional and alternative means of financing to accomplish these goals. Kilimanjaro was advised in the Agreement by Ashmit Patel of the international law firm Brimstone & Company which helped structure Kilimanjaro’s existing relationships with other African states seeking self determination. Brimstone’s managing attorney and adjunct professor of international law, Dr. Jonathan Levy, also views the Amsas Agreement as consistent with Kilimanjaro’s stated purpose to empower African economic self determination: “Kilimanjaro has a real chance here to strike a blow against global terrorism (Al Shabaab) and recruitment by bringing in the funds and expertise to build a stable resource and local employment base in Somalia. Amsas and Kilimanjaro unlike other players in Somalia’s oil sector want to keep capital at work in Africa benefitting the inhabitants
