It’s
not a country recognised by anyone other than its own government, but
that doesn’t seem to phase three oil companies scaling up exploration in
Somaliland.
UK-listed
Genel Energy and Ophir Energy, and Australia-listed Jacka Resources,
are starting to explore for oil in earnest in the breakaway state, which
declared independence from Somalia in 1991.
“We
are embarking on the largest and most significant exploration this
country has seen since it became independent 21 years ago,” oil minister
Hussein Abdi Dualeh told beyondbrics from an oil conference in South
Africa, hopeful the first drilling will start in 2014 following seismic
surveys this year. “They are starting in a major way – it’s going to be a
massive year.”
The
three explorers cover seven blocks between them and Dualeh insists they
have nothing to fear from old claims on some of the blocks issued under
the former Mogadishu administration before it collapsed.
“The
old companies from way back when Somalia was together have long gone.
These contracts don’t last forever, they are long expired. I’m not
worried they’ll have problems – I have no idea who had what,” says
Dualeh. “We have had full control of the territory for 21 years. We have
stability and access to the port – we have what any investor would like
to have.”
Under
the former Somalia regime, oil blocks were previously concessioned to
Chevron, BP and Conoco before they declared force majeure more than 20
years ago when the state collapsed. A new donor-backed government in
Mogadishu faces pressing concerns such as fighting al-Shabaab Islamist
militants, holding off piracy and establishing a nationwide
administration in the failed state.
The
new explorers are no strangers to disputed and semi-autonomous states.
UK’s FTSE-listed Ophir Energy, which owns 75 per cent of two Somaliland
blocks, also has assets in western Sahara, while Turkey-based,
London-listed Genel, which has 75 per cent of another two blocks, is
developing assets in the Kurdistan region of Iraq and will start
exploration in Somaliland in December.
Dualeh
says about a third of 24 blocks – which cover the entire country – have
so far been given out but that the prospects look good. Yemen, just
across an expanse of water, has 9.8bn barrels and Kenya to the south has
recently discovered likely commercial quantities of oil.
The
self-declared state of Somaliland, internationally recognised as a
semi-autonomous region, is agreeing individual contracts as it has yet
to release its own petroleum code. The only existing code dates back to
the days of unity.
“The
geology is just very very exciting; the whole of east Africa has woken
up and Somaliland is right at the spearhead of that,” says Mohammed
Yusef, chairman and CEO of Petrosoma, whose 50/50 joint venture with
Australia’s Jacka Resources will start the first aeromagnetic survey of
their southern Odewayne blocks on Thursday. He says exploration is
likely to run to $45-50m in the next two years. Yusef acquired the
blocks in 2005 and spent years searching for co-investors to develop the
acreage before agreeing a 50 per cent deal with Jacka Resources in
March this year.
“What’s
changed is that the investor sentiment is more positive. It’s not an
accident that it’s an Australian company,” says Yusef “They went into
Uganda against conventional wisdom and found the biggest monster in Lake
Albert and that kicked off the whole east Africa oil revolution,” says
Yusef of Jacka’s management team, who spearheaded exploration into
Uganda’s oil potential, which has so far yielded reserves running to
3.5bn barrels.
“In
Australia and Canada and to some extent in South Africa where they’re
used to investing in natural resource investing in anything that makes
sense and is viable, they can find money and they are quick to
understand risk in places like Somaliland.”
Unlike
other blocks, there are no former claimants on the 22,000 sq km of the
Odewayne area licensed to Petrosoma and Jacka, which covers parts of
three blocks.
“It’s
like discovering an undervalued share. We’re not a fragile state any
more after 21 years; we’re undeveloped but we’re a very, very resilient
state. When the oil is discovered Berbera [the port] will be shipping
oil rather than camels,” he adds.
Source: Financial times
No comments:
Post a Comment