Mar 19, 2014

Somaliland: Foreign Commercial Oil Exploration To Trigger Further Conflict?

The United Nation Monitoring Group’s annual report, submitted to the Security Council’s sanctions committee, highlighted the perilous discrepancies over which regional authority can administer licenses to Western commercial oil exploration companies. Experts warned that these inconsistencies could intensify political clashes between the central Government in Mogadishu and regional Governments, and potentially threaten regional peace and stability. 


Below is an article published by the Somaliland Sun:

Western commercial oil exploration in Sool Region of Somalia and discrepancies over which authorities can issue licenses to companies could spark further conflict in the African nation, U.N. monitors warned in a confidential report.

In the U.N. Monitoring Group's latest annual report to the Security Council's sanctions committee on Somalia and Eritrea, the experts said the Somali constitution gives considerable autonomy to regional governments to enter commercial oil deals.

But a petroleum law that has not yet been adopted by the country's parliament but is being invoked by federal officials in the capital Mogadishu says that the central government can distribute natural resources.

"These inconsistencies, unless resolved, may lead to increased political conflict between federal and regional governments that risk exacerbating clan divisions and therefore threaten peace and security," the experts group said in an annex to its annual report, which was seen by Reuters.

Around a dozen companies, including many multinational oil and gas majors, had licenses to explore Somalia before 1991, but since then Somaliland and Puntland and other regional authorities have granted their own licenses for the same blocks.

In some cases Somaliland and Puntland have awarded licenses for blocks that overlap. The experts said one such case involves Norwegian oil firm DNO (DNO.OL: Quote, Profile, Research, Stock Buzz) and Canadian-listed Africa Oil Corp (AOI.V: Quote, Profile, Research, Stock Buzz).

"Potentially, it means that exploration operations in these blocks, conducted by both DNO and Africa Oil under the protection of regional security forces, its allied militia or private forces, could generate new conflict between Khatumo State, Somaliland and Puntland," the report said.

"It is alarming that regional security forces and armed groups may clash to protect and further Western-based oil companies interests," it said.

"In this case, the involvement of a Norwegian company on one side and of a Swedish-owned/Canada-based company on the other, is even more disturbing, considering the long-standing implication of Norway and Sweden in promoting peace and dialogue in Somalia," the experts said.

Bjorn Dale, DNO's acting president/managing director and general counsel, said he was not familiar with the U.N. experts' recent report but said that the company would never engage in activities that threatened peace in Somaliland.