Somalis alarmed by govt’s decision to auction offshore blocks in London

Reading Time: 6 minutes

Somalis around the world have expressed alarm and anger at their government’s decision to launch its first post-conflict exploration licensing round in London on Thursday, calling the move “illegal” and “an auction” and warning about dire environmental consequences and possible exploitation of the natural resources in the already unstable Horn of Africa nation that has no petroleum law or functioning institutions to protect its interests.

Angry Somalis in Europe have already planned a huge demonstration in central London to coincide with the bid that is expected to take place at Claridge’s Hotel. A new hashtag, a Facebook page and a Whatsapp group all using “our oil matters” have sprung up to sensitize Somalis around the world and urge them to oppose their government’s decision.

“I wish to assure the Somali people, who are concerned about the round bid in London…for auctioning Somalia’s offshore hydrocarbon reserves, that the bid is in breach of the laws of the country,” said Senator Ilyas Ali Hassan, chairman of the Upper House’s Committee on National Resources, Infrastructure and Transportation, in a statement on Wednesday.

Somalia’s lack of petroleum law and other necessary frameworks governing exploration of natural resources, such as the laws on investment, environment and taxation are “yet to be passed” by parliament, said Hassan in the English language statement.

He warned that “the responsibility for these malpractices solely rests with the current government particularly the Ministry of Petroleum and Mineral Resources.”

Somalia’s Minister of Petroleum and Mineral Resources Abdirashid Mohamed Ahmed, however, put a brave face, avoiding the use of the term “licensing round.” Instead, he said the London “exhibition” is an attempt to share the country’s seismic data with potential foreign investors.

“First off, the London conference is a one-day conference in which the collected seismic data of Somalia would be presented. No one can auction off anything in one day,” Ahmed told the BBC Somali Service on Tuesday. “I want to inform the Somali public that there is no auction.”

He said it would take about “ten years” for Somalia to produce oil.

“Today, we want only to present the Somali (seismic) data. We’re not giving out blocks or giving out contracts,” Ahmed said, adding that to seal deals with international oil and gas companies requires at least one year of negotiations.

The minister’s remarks were similar to a Somali language statement his office issued on Jan. 26 in which he also denied that Ministry of Petroleum and Mineral Resources was auctioning off Somalia’s oil. Last year, Ahmed said the “bid round” would be announced when the nation’s parliament passes the petroleum law.

In 2016, during the Africa Oil Week in South Africa, then Petroleum Ministry’s Permanent Secretary Jamal Khassim Mursal, disclosed Somalia’s plan to open the country’s oil and gas exploration to international investors.

“The ministry is pleased to announce an intention to hold Somalia’s first-ever offshore oil and gas licensing round set to happen” in 2017,  said Mursal, promising that the ministry will “execute a fair and transparent competition.”

Offshore blocks up for bid are located in Galmudug, Hirshabelle and Southwest regions, he said, adding that blocks awarded to Shell and Exxon Mobil in concession agreements in 1988 are excluded. He also said Soma Oil and Gas Exploration Limited’s “notice of application” for blocks was excluded as “direct production sharing agreement” was continuing between the Somali government and the U.K.-based company, which in 2013 struck a deal with the then Somali government to conduct seismic surveys in exchange for 12 oil and gas blocks totaling 60,000 square kilometers.

In 2015, the U.N. Monitoring Group on Somalia and Eritrea accused Soma Oil and Gas Exploration Limited of paying nearly $600,000 to protect and expand its 2013 agreement with Somalia’s Ministry of Petroleum and Mineral Resources, saying these “quid pro quo” arrangements “undermine Somali public institutions through corruption”.

The U.N. group said the payments — which Soma Chief Executive Robert Sheppard termed “Capacity Building Agreement” — “created a serious conflict of interest, in a number of cases appearing to fund systematic payoffs to senior ministerial officials”.

On Thursday, Somalis were not buying their governmet’s assurance. At least three opposition parties, including the party of immediate former President Hassan Sheikh Mohamud, voiced their objection to the bid round in London.

“The licensing round is illegal, exploitative and blatant auction of Somali national resources. The Somali public can’t and won’t accept it,” said Mukhtar Ainashe, a former adviser to former President Sheik Sharif Sheik Ahmed and one of the organizers of the London demonstration. “The offer threatens Somalia’s national interests.”

Ainashe said the government led by President Farmajo and Prime Minister Hassan Ali Khaire whose writ doesn’t even go beyond Mogadishu, “can’t pretend to represent all regions in the country.”

“The blocks are not inside the presidential palace to be awarded to international companies,” he said, adding that “President Farmajo’s government does not have the right to constitutionally launch a licensing round, which all Somali stakeholders are not party to it.”

Ainashe said foreign companies should know that if they buy blocks from the current Somali government they’re undermining “our national cohesion and would be held responsible for any conflict that erupts in the country as a result of the licensing round.”

The same concern was in the past echoed by the U.N. Monitoring Group, which warned that the production of oil could spark conflicts among Somalis.

“Let’s finish our constitution and have laws stating how we can manage and share our resources,” said Ainashe, who is a PhD student on national security and counterterrorism.

It’s far from clear how the Mogadishu-based Somali government could enforce any agreement it signs with an international company in regions that are not under its authority. The fragile national government doesn’t even fully control the capital, as al Shabab militants frequently target government installations inside the city.

Also, Somalia, which the most corrupt country in the world according to Transparency International, barely has any capacity to avert misappropriation of funds because of the country’s weak institutions and poor financial management. In recent years, the government has been cutting secret deals with foreign countries and entities without taking them to the emasculated national parliament for approval or rejection.

Union for Peace and Development, the party of former President Mohamud, urged the Somali government and international oil and gas companies to call off the bid until Somalia puts in place legal frameworks necessary for such an exercise. It said that the country didn’t not have a trained workforce with the sufficient expertise and experience to enter into international negotiations of this kind.

“This peculiarly rushed bid round is either designed to favour certain foreign oil companies that are well connected with the current leadership or the Ministry of Petroleum and Mineral Resources is inadvertently tricked into issuing licenses to bogus brokering firms which could impede oil exploration in the future,” the party said in a statement.

Wadajir Party has also called on oil and gas companies invited to the bid “not to be duped into buying oil blocks” from the Somali government because offering offshore blocks is not an “issue that the government alone can determine. For, what’s is on the table is a national asset.”

“We call o the Somali public to take part in the demonstration against the selling of Somali oil blocks to protect the resources of its country and to prevent auctioning the oil and minerals of its country,” said the party in a statement.

The Somali government’s move was galling for many Somalis who once adored President Mohamed Abdullahi Mohamed Farmajo and saw him as a savior but now feel a sense of betrayal.

On its website, Spectrum Geo, which provides seismic data to international oil and gas companies, misleadingly wrote that Somalia made “further progress on the framework planning and legislation for oil and gas exploration offshore Somalia.”

“They also plan to reveal the legal & regulatory framework, petroleum laws, local capacity, fiscal terms, round timings and other conditions,” it said. “This (London) event is also expected to include geological presentations.”

But in September 2017, the Cabinet revoked the Somali Petroleum Law of 2008 and approved a new one, which is yet to be subjected to a vote by lawmakers. The country doesn’t have a Petroleum Authority that can negotiate with international oil companies. Nor does it have National Oil Company or Environmental Protection Agency that can work with foreign oil and gas companies and monitor their activities.

The Somalia Star saw a Spectrum letter sent to the U.K. Embassy in Mogadishu inviting Somali officials to the London bid. The letter’s content clearly contradicts with Minister Ahmed’s claim that the Somalia government is co-sponsoring the event with Spectrum.

Spectrum has since Nov. 8, 2018 been publicizing the Somali government’s decision to offer offshore blocks in London on Feb. 7 February, calling it “auspicious launch event.” The company has even “an explorer’s guide” video that runs 1 minute and 13 seconds in which it claims to have “shot two large surveys totaling 40,000 km of 2D seismic data” in Somalia in recent years and promotes Somalia as a country that “has seen relative advances in political stability.”

“In preparation for the offshore licensing round, Spectrum has completed acquisition and processing of 20,185 km of 2D long-offset seismic data, following a co-operation agreement with the Federal Government of Somalia,” said the November news piece on Spectrum’s website, “This program complements 20,500 km of existing seismic data that was acquired in 2014.”

In the piece titled “Somalia Announce Dates for First License Round,” Spectrum said there would roadshow presentations for Somali oil and gas exploration bidding round in Houston and Dubai.

The Somali “Ministry of Petroleum and Mineral Resources will unveil the final block delineation, expected to consist of up to 50 blocks covering a total area of over 173,000 km2,” said Spectrum Geo, which boasts of having offices in the USA, Norway, UK, Brazil, Australia, Indonesia and Singapore.

Spectrum said the current bid would expire on July 11, 2019.

Facebook Notice for EU! You need to login to view and post FB Comments!