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Somalia Still Working on Petroleum Law, Aims Oil Exploration

“No company is going to start drilling without agreement with regions,” says Mohamed. “So why rush? It’s not good for the reputation of the country.”

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Engineers and visitors view an exploratory well near Dharoor town, from the port of Bosasso on the Gulf of Aden in Puntland, Somalia, Jan. 17, 2012. VOA

The Somali government says it will award exploration licenses to foreign oil companies later this year, despite calls from the opposition to wait until laws and regulations governing the oil sector are in place.

Seismic surveys conducted by two British companies, Soma Oil & Gas and Spectrum Geo, suggest that Somalia has promising oil reserves along the Indian Ocean coast, between the cities of Garad and Kismayo. Total offshore deposits could be as high as 100 billion barrels.

 

“We have presented our wealth and resources to the companies,” Petroleum Minister Abdirashid Mohamed Ahmed told the VOA Somali program Investigative Dossier. “We held a roadshow in London [last week], and we will hold two more in two major cities so that we turn the eyes of the world to contest Somalia.”

But several lawmakers have expressed concern the government is moving too quickly. Last week, the head of the National Resource committee in the Upper House of Parliament accused President Mohamed Abdullahi Mohamed’s government of a “lack of due diligence” and violating the constitution.

Barnaby Pace, an investigator for the NGO Global Witness, which exposes corruption and environmental abuses, says Somalia, after decades of internal conflict, does not have the legal and regulatory framework to handle oil deals and the problems they can cause, such as environmental abuses, corruption, and political fights over revenue.

“There is not a clear consensus about how the oil sector could be managed in Somalia,” he said. “And once Somalia makes deals like the one it’s proposing, it may be locked in for many years and find it difficult to renegotiate or change them to best protect itself.”

Former oil officials speak out

Somalia’s parliament passed a Petroleum Law to govern oil sector in 2008 when the country operated under a transitional charter. But constitutional experts say that law was nullified after a constitution was ratified in 2012.

A proposed new law is now before parliament for debate. The bill says negotiations for oil-related contracts will be the responsibility of the Somali Petroleum Agency, which would not be formed until the law is passed.

Ahmed said government’s timetable for awarding licenses is just “tentative,” though he believes the government can keep to its schedule.

The government says it will accept bids for exploration licenses on November 7, and the winners will be informed immediately. It says production-sharing agreements will be signed on December 9, with the agreements going into effect on January 1, 2020.
The government says it will accept bids for exploration licenses on November 7, and the winners will be informed immediately. It says production-sharing agreements will be signed on December 9, with the agreements going into effect on January 1, 2020. VOA

 

But Somali lawmakers and opposition leaders are worried the government is in a needless rush.

Jamal Kassim Mursal was permanent secretary of the Somali Petroleum Ministry until last month when he resigned.

He says when the government came to power in 2017, the ministry was informed that bids for oil exploration licenses would not be considered until the Petroleum Law was passed and “we are ready with the knowledge and skills.”

Since then, he told VOA, “Nothing has changed — petroleum law is not passed, tax law is not ready, capacity has not changed, institutions have not been built.”

Abdirizak Omar Mohamed is the former petroleum minister who signed the 2013 seismic study agreement with Soma Oil & Gas.

Mohamed said the country needs political consensus and stability before oil drilling. He notes that a resource-sharing agreement between the federal government and Somali federal states has yet to be endorsed by the parliament.

“No company is going to start drilling without agreement with regions,” says Mohamed. “So why rush? It’s not good for the reputation of the country.”

Soma and Spectrum’s advantage

Mursal also objects to an agreement that gives first choice of oil exploration blocks to Soma Oil & Gas, one of the companies that conducted the seismic studies.

According to the agreement, Soma Oil & Gas will choose 12 blocks or 60,000 square kilometers to conduct oil exploration. Among these are two blocks believed to contain large oil reserves near the town of Barawe.

He says the government needs to renegotiate and offer just two blocks instead.

“This is the one that is causing the alarm,” he said. He predicts that if Soma Oil & Gas gets to choose 12 blocks, the company will “flip” some of the blocks to the highest bidder.

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Mohamed said the country needs political consensus and stability before oil drilling. He notes that a resource-sharing agreement between the federal government and Somali federal states has yet to be endorsed by the parliament. Pixabay

In 2015, Soma Oil & Gas was caught up in controversy after allegations of quid pro quo payments to the Somali Ministry of Petroleum. The payments were termed as “capacity building.” The following year, Britain’s Serious Fraud Office closed the case because it could not prove that corruption took place.

Somalia’s current prime minister, Hassan Ali Khaire, was working for Soma Oil & Gas at time. Somali officials say that since taking office, Khaire has “relinquished” his stake in the company, said to be more than 2 million shares.

The other company that conducted seismic surveys, Spectrum, also made payments to the Somali Ministry of Finance, according to Mursal.

Mursal told Investigative Dossier that between 2015 and 2017, Spectrum paid $450,000 every six months to the ministry.

A senior official who previously was involved in the Ministry of Petroleum told VOA that Spectrum paid $1.35 million in all. He said the payment was “consistent,” though, with the advice of the Financial Governance Committee, a body consisting on Somali and donors which gives financial advice to Somalia.

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Spectrum has not yet responded to Investigative Dossier requests for an interview.

Current Petroleum Minister Ahmed said the government will do what is best for Somalia, but needs to have a law governing the oil sector in place.

“The parliament has the petroleum law,” he said. “Without it being passed, we can’t touch anything.” (VOA)

Next Story

Private Sector Companies Join Hands to Support Refugees’ Access to Clean Energy

Private Sector Joins Clean Energy Drive for Africa's Refugees

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A miniature solar energy panel at the Refugee Forum in Geneva. VOA

By Lisa Bryant

In northern Ethiopia, tens of thousands of mostly Eritrean refugees are getting connected to families back home, partly thanks to last year’s peace deal between Addis Ababa and Asmara, but also to clean energy.

A Spanish alliance that includes three power companies is linking refugee camps in Shire, near the border with Eritrea, to the country’s energy grid, which largely relies on hydropower. The next step is equipping refugee households with solar energy.

“It’s a catalyst,” said Javier Mazorra, partnership coordinator for the group, Alianza Shire. “You need energy for health, for education, for protection, especially for women.”

Humanitarians hope what is happening in Shire will someday become the new normal, amounting to a game changer for refugees, 90% of whom have limited access to electricity, according to the United Nations. Indeed, energy access counted among key issues addressed this week at a global refugee forum in Geneva, with Africa considered a top priority.

“The current situation in Africa is pretty poor, pathetic,” said Andrew Harper, climate action special adviser for the U.N. High Commissioner for Refugees, which co-hosted the meeting.

Often refugees have a single solution, “which is going to surrounding forests, woodland, and cutting it down,” Harper said.

Greening Africa’s energy 

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Climate action special adviser Andrew Harper of UNHCR, which has launched a sustainable energy strategy for its refugee camps. VOA

The refugee agency has launched a four-year strategy to transition to clean energy in all of its camps, although Harper offered no fixed deadline or price tag for doing so. A UNHCR-sponsored report out this week also found renewable energy to be a cost-effective and reliable energy source for refugees.

For Africa in particular, the stakes are high — inside and outside refugee settings. Along with Asia, it has among the world’s highest rates of reliance on charcoal and firewood. Adding in charcoal exports, that has translated into massive deforestation in parts of the continent.

Firewood- and charcoal-based energy also carry myriad other problems, posing health risks from smoky fires and security threats for women collecting charcoal, and heightening tensions between refugees and host communities who also rely on the fast-thinning trees.

Kathleen Callaghy clean energy
Kathleen Callaghy of NGO Clean Cooking Alliance believes the private sector should partner with humanitarian efforts in bringing clean energy to refugees. VOA

Many of these problems can be seen in East Africa, home to some of the continent’s largest refugee communities.

“There are some energy solutions,” said Kathleen Callaghy, senior humanitarian program associate for Clean Cooking Alliance, a Washington, D.C.-based nonprofit. “But the funding, the political will and the capacity of organizations in the humanitarian community is not enough to sustain or expand these projects over time.”

In drought-prone Ethiopia, the government launched a massive reforestation initiative that saw more than 350 million trees planted countrywide in a single day.

“This challenge is one of the prominent challenges we have,” he said, adding host communities are facing the fallout.

Convincing private sector

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Fisseha Meseret Kindie, of Ethopia’s refugee agency, says the country needs support to develop clean energy for the refugees it hosts. VOA

Transitioning to green energy in Africa will mean tapping a private sector that may be wary of investing in refugees and a continent deemed risky.

“Quite honestly, there’s very little in it for them right now,” Callagh, of the Clean Cooking Alliance, said, suggesting alliances with humanitarian agencies as the way forward.

But for Mazorra, of Alianza Shire, the payback is more than financial.

“There are a lot of incentives,” he said, including learning to operate in risky settings. “When you are struggling with really poor resource situations, innovation is key. And there are some innovations that could go back to Spain.”

Harper, of UNHCR, believes there’s another, broader case to be made.

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“We’re basically saying the market for this in Africa is not just 6, 7 million refugees,” he said. “It’s 1.2 billion people. We’ve got to look at it as much more part of the rural electrification process across the continent.” (VOA)