Somaliland: The Horn of plenty
Upstream, July 27
Barry Morgan
Hargeysa looks for a return of big Western oil companies although the country still awaits recognition from the international community
Northern Somalia used to be hot stuff for the oil majors - and most expect it will again soon be attracting the big players to its on and offshore prospects.
Before the troubles they were all out here in force and officials confirm that none have thus far formally declared force majeure on their acreage holdings.
Without doubt the most prized acreage remains technically in the hands of Chevron, which picked up block-32 back in April 1986.
Amoco moved smartly to takeover block-35 from Lundin Oil after the Swedish company wrested finance from the Kuwait Fund to extend the mobilisation period.
Amoco then snared offshore block M-11 on its own account while Conoco won onshore blocks 27, 28, 29 and 31.
Phillips Petroleum headed offshore, but it was Pecten that licensed the bulk of available marine acreage off Somalia, landing a total of 14 offshore blocks.
For the Hargeysa regime this line-up remains officially unchanged, although it has recently resumed talks with interested suitors.
Altogether, Somaliland has seen nine wells, three each by Chevron, Amoco and Conoco and another three drilled by McDermott during an initial promotion phase orchestrated by local oilman Abdi Jama Sed. An Austin University-trained petroleum engineer, Sed worked for Kuwait Oil before consulting for all the majors in his home patch under the former Siad Barre dictatorship.
Sed led the talks that ushered in the majors first time around and he has the ear of President Mohammed Egal, who is keen to fast-track the resurgence of exploration and production in the country.
He recalls that just before the conflict, Chevron's block-32 revealed "a good basement with untested cretaceous shales, which indicated dry gas at 11720 feet subsurface."
McDermott logged shows in the same area back in 1957, says Sed, "and that's why Hunt Oil, Arco, Esso and Conoco were also desperately keen to get this block".
Block 33 is free, as is block-26 surrounding Hargeysa, close to Ethiopia. Hunt tested tertiary gas at the Kabagorey border region in the mid-80s and told local officials that the area contained only 25% oil while the rest was gas-bearing sands.
Sed's instincts suggest this will be the key to future energy integration prospects.
"Frankly, if you look at what we might have here and consider Ethiopia's Calub gas field complex in the Somali-populated Ogaden Region to the south, then we could propose a serious liquefied natural gas export system using the port of Berbera - Maxwell, Hunt and Conoco have privately hinted at several trillions of cubic feet reserves potential," he says.
Conoco drilled a well in Puntland's Sool district without declaring a commercial discovery, but the war intervened when they tried to move the rig, leaving many questions unanswered, Sed adds.
Elsewhere, Elf once walked away from Puntland's offshore while Agip drilled a dry hole, Ras Hafun, off Puntland on block M-7 and BP even managed a seismic survey off Heez Meit in 1984 before exiting.
Meanwhile, ministry minds are refocusing on M-8, located off the Puntland marshes where Shell drilling saw traces in its Parknorsh well a decade ago.
However, several suitors have other ideas. Local sources say Amoco's block-35 is attracting interest from promoters who "keep coming back under different names".
A Taiwanese-backed outfit is currently exploring in Puntland using clan contacts, but without Hargeysa's permission, despite using Berbera to import equipment from Abu Dhabi.
"They did a deal with the (self-proclaimed) first President of Punt, Mohammed Hashi, who himself is of Somaliland origin, but without documents and using business cards printed up in Hargeysa," says an exasperated ministry official.
United Nations sources confirm that actual oil extraction, not just exploration, was planned "but now they've got trouble with the local elders and we hear work has stopped".
The same Taiwanese backer is interlinked in a broad-based bid for block-35 inside Somaliland with Malaysia-based Zarara Petroleum, itself closely associated with the Mozambican Oil Minister John Kachamila, Arab-American Oil and a UK outfit, known as both Rovinchin and Rovagold, run by Dr Andrew Chakravarty.
Although the latest cover for this bid is revealed by Minister for Mineral Resources Mohamoud Abdi Farah as a new company called Intercontinental Petroleum Search (IPS), junior officials indicate that the move masks renewed interest from original licensee Lundin Oil and an unnamed Bolivian businessman brought in by the UN.
Farah says suitors have visited from as far away as Australia and WesternGeco has shown interest in shooting offshore seismic.
Rovagold came this year with some Finnish geologists looking for gas prospects and an inside source reveals three visits from an Austrian national of Jewish-Ethiopian origin seeking the concession for Vienna-based Greenway.
"We actually signed back in April and IPS say they want to drill this month near Berbera, so we will wait and see," says Farah, who is keen on seeing a return of the big oil companies.
"There's a lot of falsification of documents and it's hard for us to check out a company's credentials, but we are trying to welcome reliable partners," he says.
"I hope Conoco and Chevron will return because they have important concessions and we believe we are sitting on very large oil and gas deposits. If these big companies still think Somaliland is unstable, they should come and see our administration for themselves."
Unfazed by the country's lack of recognition is TotalFinaElf which, after investing $2 million in an oil storage and distribution project outside the port of Berbera, is now seeking an E&P concession.
Backed by the French government, several TotalFinaElf retirees are presently identifying likely drillsites, both on and offshore, say Hargeysa and UN officials. |
