Oil companies in Somalia must deal with central go
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Posted On: 05/02/2014 11:07:13 AM
Oil companies in Somalia must deal with central government
KIMJF has agreement with the Federal Government for 5% of the billion dollar ACA Block and a current NI 51-101
LONDON (Reuters) - Oil companies eyeing Somalia's exploration potential must sign contracts only with its central government, a minister said, dismissing as invalid existing deals between regional governments and companies such as Genel Energy.
The East African coastline has rapidly emerged as one of the world's hottest oil exploration areas. Waters off Somalia, a country trying to put two decades of armed chaos behind it, are expected to be the next on the radar of oil and gas companies.
Some companies have already started to move in, but they have signed contracts with the governments of two different regions, the breakaway Somaliland enclave in the case of London-listed Genel and Norway's DNO, and semi-autonomous Puntland in the case of Canada's Africa Oil Corp.
"From the perspective of the government these are not valid licences and they (the companies) should start negotiations with the federal government," Somali Minister of Natural Resources Abdirizak Omar Mohamed said on the sidelines of a conference.
"There are legal questions that need to be addressed."
Genel declined to comment on what the minister said, while Africa Oil and DNO could not immediately be reached for comment.
The central government in Mogadishu faces a huge task in trying to unite a nation with devolved powers after two decades of war and clan strife.
U.N. monitors warned in a report in July that Western commercial oil exploration in disputed areas of Somalia and discrepancies over which authorities can issue licences to firms could spark further conflict in the country.
The minister said security conditions were "sufficient" for companies that have contracts dating from before a civil war started in 1991 to return and end long periods of force majeure.
"We will honour their concessions. We will honour their rights. We want them to come back," he said, appealing to the world's largest oil company Exxon Mobil and Shell, which both had a presence prior to 1991.
In addition to the ongoing security concerns - in focus after the September 21 Westgate mall attack in neighbouring Kenya which killed at least 67 people - Somalia is yet to adopt a new petroleum law, an issue that Omar Mohamed conceded was taking "some time".
Soma Oil & Gas, a privately owned London-based company, took the plunge into Somalia earlier this year, signing a deal with the government to provide it with geological data.
When asked about the threat from pirate attacks, Soma pointed out that their incidence has fallen in the last two years due to increased naval patrols and the presence of armed security teams on ships.
Omar Mohamed was also hopeful of an end to a row between Kenya and Somalia over their maritime border, another potential threat to the hunt for resources in that part of the world.
"Somalia is ready to start a dialogue with Kenya and start discussions and resolve it in a peaceful way," he said of the frontier dispute.
KIMJF has agreement with the Federal Government for 5% of the billion dollar ACA Block and a current NI 51-101
LONDON (Reuters) - Oil companies eyeing Somalia's exploration potential must sign contracts only with its central government, a minister said, dismissing as invalid existing deals between regional governments and companies such as Genel Energy.
The East African coastline has rapidly emerged as one of the world's hottest oil exploration areas. Waters off Somalia, a country trying to put two decades of armed chaos behind it, are expected to be the next on the radar of oil and gas companies.
Some companies have already started to move in, but they have signed contracts with the governments of two different regions, the breakaway Somaliland enclave in the case of London-listed Genel and Norway's DNO, and semi-autonomous Puntland in the case of Canada's Africa Oil Corp.
"From the perspective of the government these are not valid licences and they (the companies) should start negotiations with the federal government," Somali Minister of Natural Resources Abdirizak Omar Mohamed said on the sidelines of a conference.
"There are legal questions that need to be addressed."
Genel declined to comment on what the minister said, while Africa Oil and DNO could not immediately be reached for comment.
The central government in Mogadishu faces a huge task in trying to unite a nation with devolved powers after two decades of war and clan strife.
U.N. monitors warned in a report in July that Western commercial oil exploration in disputed areas of Somalia and discrepancies over which authorities can issue licences to firms could spark further conflict in the country.
The minister said security conditions were "sufficient" for companies that have contracts dating from before a civil war started in 1991 to return and end long periods of force majeure.
"We will honour their concessions. We will honour their rights. We want them to come back," he said, appealing to the world's largest oil company Exxon Mobil and Shell, which both had a presence prior to 1991.
In addition to the ongoing security concerns - in focus after the September 21 Westgate mall attack in neighbouring Kenya which killed at least 67 people - Somalia is yet to adopt a new petroleum law, an issue that Omar Mohamed conceded was taking "some time".
Soma Oil & Gas, a privately owned London-based company, took the plunge into Somalia earlier this year, signing a deal with the government to provide it with geological data.
When asked about the threat from pirate attacks, Soma pointed out that their incidence has fallen in the last two years due to increased naval patrols and the presence of armed security teams on ships.
Omar Mohamed was also hopeful of an end to a row between Kenya and Somalia over their maritime border, another potential threat to the hunt for resources in that part of the world.
"Somalia is ready to start a dialogue with Kenya and start discussions and resolve it in a peaceful way," he said of the frontier dispute.
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