SOMALIA SEEKS RETURN OF MAJORS TO UPSTREAM

Peter Kemp International Oil Daily Somalia is to ask oil companies to return to concessions they left when the central government collapsed in 1991 and considers exploration licenses granted by the semiautonomous Puntland region to new companies to be illegal, according to a senior government oil adviser. Major oil companies including Royal Dutch Shell, BP, ConocoPhillips and Eni have the right to resume exploration of blocks previously licensed directly by them or their predecessor companies, such as US Amoco, which is now part of BP, and they will have 12 months to take up the offer of new production sharing agreements (PSAs), Abdullahi Haider, senior adviser to Somalia`s energy ministry, said Monday. A new licensing round is also in the cards, possibly as early as next year, based on dividing the country into exploration blocks of 5,000 square kilometers each. The oil moves come as Islamist militants have been ousted from their last main stronghold, the southern port of Kismayo, by Kenyan armed forces and a new Somali government is about to be formed in Mogadishu to replace the internationally backed Transitional Federal Government (TFG) (IOD Jun.7`12). “The security situation is improving. The last spot the militants were controlling was Kismayo and the security [there] is now being taken care of,” Haider said. After the election of a parliamentary speaker and president by the newly elected parliament on Sep. 10, a new prime minister and cabinet are to be named “within a few days,” Haider told the CWC East Africa Oil & Gas conference in London on Monday. Plans call for the speedy relaunch of oil exploration onshore and offshore Somalia, based on a 2008 Petroleum Law drawn up under the TFG. The new PSC has a seven-year exploration period and a 20-year production phase, with a five-year extension. Haider said that Somalia`s oil law required that previous explorers who had declared force majeure on their activities in 1990-91, when the former regime of Siad Barre collapsed and Somalia descended into civil war, should be offered a new production sharing contract to replace their old concession agreements. As well as the majors, US Murphy Oil, Canadian Natural Resources, Talisman and Finland`s Neste were previously present, he said. Shell has already held talks with the authorities about reviving its offshore exploration rights, Haider told journalists on the sidelines of the conference, adding that France`s Total had secured offshore rights near Somalia`s disputed maritime frontier with Kenya. In a warning of potential conflict with its southern neighbor, the award by Kenya of deepwater exploration licenses in the northern Lamu Basin to Italy`s Eni, Norway`s Statoil and the US` Anadarko was “hugely contested” by Mogadishu, the government adviser warned. Somalia maintains that around 120,000 sq km of offshore acreage allocated under license by Kenya is in Somalia`s territorial waters. “The two governments have to discuss it,” said Haider. “First we have to clarify the maritime border.” Explorers in the northeast region of Puntland, where Horn Petroleum has recently drilled unsuccessfully, are also under threat if and when Mogadishu moves to reassert its authority to control all licensing and return abandoned concessions to their original holders (IOD Aug.29`12). “We have to tell regional authorities what they have been doing is not correct,” said Haider, referring to the Nugaal and Dharoor Valley licenses in Puntland held by Horn Petroleum, an affiliate of Canada-based Africa Oil Corp. with two Australian partners, Range Resources and Red Emperor. Their acreage was originally licensed to Conoco. “The previous concession holders must tell them their agreements are null and void,” Haider told journalists on the sidelines of the conference. “If they can`t settle it [in a] friendly [way] they will have to do the courts.” The Somaliland region in the northwest has declared independence from Somalia but has not received international recognition. UK-listed Ophir Energy is among companies with offshore exploration rights in Somaliland.