Will Oil Production in Somalia Create New Conflict ?

 

Written by: Ameen Guled

 Somali’s natural oil and gas exploration begun in 1950’s and halted after the central government collapsed in 1991 and all the agreements related to oil explorations has been put in a state of force majeure, since the transitional government, the Somali government was trying to reconstitute the petroleum agreements.

Somalia has a ministry of petroleum and oil but Somali people doubt the quality of the ministry’s staff because this ministry is science based body which needs to have highly trained experts on petrol and gases and the ministry should also have distinct lawyers,

Abdulkadir Abiikar Hussein who is a formal chief of technical staff of the ministry said they don’t have well trained and professional staff whom we can trust with the foundation of Somali petroleum exploration agreements, He mentioned they once had a meeting with USA based company called Coastline Exploration the company sent12 members delegate and they were only 2 members representing the whole country in that meeting.

Mr. Hussein added quote ‘I am a geologist and my other colleague who accompanied me in the meeting was economist’.

In June 2018 The upper and the lower houses of the Somali parliament passed a production sharing agreement to president Mohamed Abdullah farmajo who also signed the agreement

 I created the following table to illustrate the short 4 pages’ production sharing agreement signed by president Farmajo in February 2018

OFFSHORE	central	the state	city found	other-states
off-shore	55%	25%	10%	10%
on-shore	30%	30%	20%	20%

NB: beyond 24 nautical miles is exclusively for the central government.

 

The 2018 production sharing agreement divides the oil into two categories which are (A)offshore (B) onshore.

(A)Off-shore

The oil drilled from the sea gives the central government 55% of the production after deducting all the expenses, the state which the petrol was drilled from takes 25%, the city or the town in which the oil is drilled from take 10% of the total production and finally all the other remaining 4 states share the remaining 10% form the total value of the production.

(B)On-shore

The natural gas which is produced from the onshore gives 30%  share to the central government, 30% to the state in which it was produced, 20% to the city/town in which it was drilled and all other federal state members share the remaining 20%.

The biggest challenge in this production sharing agreement is how the borders between the federal member states should be determined more precisely on the offshore,

The formal president of Hirshabelle Mohamed Abdi waare who attended the meeting in which this agreement (in Baidoa the capital city of southwest state) was reached said ‘we all knew such challenges will arise but we reached this agreement so that it can be the foundation for future agreements and it is open for modification and alteration

In February 2022 the former minster of petroleum and natural gases Mr. Abdirashid Mohamed Ahmed reached an agreement with coastline exploration in Istanbul-turkey

There was no any government official who briefed about this agreement to the public but this camouflaged meeting between minister Abidrashid and coastline exploration came into light after the company announced they reached an exploration agreement with the Somali government on 19/02/2022.

Coastline exploration who was previously known as Som oil and gas paid $7million agreement policy charges.

The prime minster of Somalia Mohamed Hussein Rooble ordered the attorney general to review and analyze the agreement in accordance to the constitution.

The attorney general recommended the prime minster to charge for corruption to anyone who is involved in this agreement because of the following guidelines and regulation in which the minster did not respect any of them,

 Before such agreement is supposed to be signed

1)    The agreement has to be reviewed by the branch of law of the foreign ministry and cooperation in accordance with the constitution

2)    The attorney general has to give recommendation statement about the agreement in pursuant to the national law before it is signed.

3)    The prime minister has to present printed statement about the agreement to the minister’s cabinet.

4)    Finally, the ministers’ cabinet has to pass it

 Both president Mohamed Abdullah and his prime minister Mohamed Hussein roble dismissed the agreement between Somalia and coastline exploration which was signed in Istanbul-turkey on 19 February 2022.

A survey conducted by the Norwegian energy company called TGS who was previously known as SPECTRUM estimated the petrol barrels that can be drilled between GARA-AD and Kismayo over thirty 30billion barrels of petrol which can be drilled from around 12 blocks with $2 million signature policy charges for each block although coastline exploration paid $1million signature policy for each block which is equivalent to $7 million in the total 7 blocks it is given to explore.

Somalia is desperate for anything that can boom its economy because 70% of the Somali population is below the poverty line with $1.90 daily income, the country’s 3-decade civil war conflicts collapsed the economy, caused financial disasters and food insecurity,

over and above all that the natural disasters like floods and climate change has put the country at higher risk for famine consecutive droughts and floods, so there is no doubt that oil and gas production will help Somalia to overcome many obstacles, However I feel there is a conflict feasibility in oil production in Somalia which can fuel up  the long-lasting conflicts due to the lack of equal production sharing policies, and the Somali government is no capable to deliver public services in all around the country.

We can take such examples from what happened in Niger delta region in Nigeria, the conflict in this region broke out in 1980’s over the tensions between oil production companies and some minority ethnic groups in that region.

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BY: Ameen Guled