Somalia’s Energy Future: Getting It Right

Published on 16th October 2012

Oil prospects in Somalia                          Photo courtesy
After more than two decades, not only has Somalia begun the long hard road to recovery, but it has also begun to talk about energy resource development, of which Somalia is thought to have plenty of. I am confident that the federal government, the regions, and the Somali people can come together and cooperate in the formulation of one national energy strategy that will allow Somalia to prosper in the near present and future generations.

Can One Energy Policy Govern All?

Absolutely! The central government has an enormous role to play in the development of this policy. The argument that Somalia is too fractious to have a universal energy law that governs the entire country is usually supported by sympathizers of clan fiefdoms, foreign oil operatives and those that hold a vested interest in the status quo. Like it or not, Somalia is maturing, albeit slow, and there is no reason why the tribal games of old should have any play in the Somalia of new. Sure, regional governments would have some autonomy in administering resources within their provincial borders, but all legislation and contract approvals governing Somali resources, at least until the country has become fully stable, will come only from the federal parliament in Mogadishu.

Self Interest Deals No Longer Accepted

There is plenty of interest in Somali energy resources from foreign companies and the stakes are getting high. It seems every average Joe “representative” of a Somali faction or region speaking on behalf of Somalia is selling an oil block these days, and there are plenty of foreign buyers who are willing to swallow the risky buy. In the last two months alone the East African Energy Forum has scuttled and blocked four of these shady deals involving one man Somali regional ministries and their cooperative foreign buyers, selling the country’s resources for pennies. To discourage these opportunists, the EAEF’s lawyers have taken action and built corruption and treason cases against 4 of these Somali individuals which it intends to hand over to government courts in the near future. The foreign oil companies and contractors that are involved in these deals will be listed and shut out of the future Somali oil industry. Nevertheless, we will continue to isolate these people further and further as the world begins to realize, Somalia is no longer that place to conduct a quick, shadowy deal and go unnoticed or unchallenged by its people.

Learning The Hard Way

That’s what Kenya did two months ago when it tried to illegally sell 4 offshore oil blocks in Somali waters to international oil giants. The concerted effort of the EAEF and its partners, supported by the Somali people, swiftly put our neighbour on notice that Somalia was no longer the pushover target it once was. The EAEF strategy of engaging and warning Kenya’s business partners, rather than Kenya itself has isolated them and their ill-gotten plans and has borne fruit for the Somali side.

Two of the four oil accomplices in the infringement of Somali waters (Statoil of Norway and Anadarko of USA) recently scrapped their plans to go ahead with the illegal activity after the EAEF applied relentless pressure on their respective embassies and home governments to avoid damaging their reputations in the region, even prompting the Norwegian Parliament to summon Statoil to explain the EAEF accusations of their corrupt practices in Somalia. This prompted the Kenyan government to issue the companies involved, the desperate ultimatum of ‘drill in these oil blocks or lose your license.’

Drilling offshore wells cost upwards of $30 million, likely more due to the ultra-deep water targets that these East African offshore oil blocks constitute. With that in mind, you’d be hard pressed to find an oil company willing to spend that capital drilling in disputed waters.

We intend to use Kenya as an example that any foreign operative or country looking to illegally exploit Somali resources can expect a similar coordinated response from the EAEF and the Somali people. The fact that Kenya is attempting to lead us to believe that its current military involvement in Kismayo is designed to “liberate” instead of providing it with a buffer of influence that will allow it free reign on Somalia’s southern offshore resources, only proves to us the absolute mockery the world takes Somali intellect for.

All Previous Oil Deals Reviewable

We have advocated for the new Somali Parliament to pass a draft motion declaring that all previous oil deals in Somalia are subject to parliamentary review no matter where or by whom they were signed. We’ve proposed strict filter guidelines that would likely render most if not all of these shady oil deals invalid due to them being against the Somali national interest. In a nutshell, if the deal doesn’t benefit the people instead of a few Somali signatories, it will be rejected. This is a measure that has been received amicably during our consultations with countless MP’s, the Speaker and the President, and has only garnered opposition from wildcat oil companies (which have no business holding the type of lucrative contracts handed to them by their Somali accomplices) and those who have their clan interest still to serve. Indeed it’s an unholy alliance we strive to rid the country of.

No Oil Exploration for 4 Years

We have proposed to the government an oil exploration moratorium for the first term of the new central government in Somalia effective immediately after passing by Parliament. That means no foreign oil exploration, no surveys, no testing, etc., as this will all be done in-house through the federal energy ministry. This makes any current oil exploration in the country illegal instituting a deadline of 60 days for any remaining foreign oil companies to evacuate Somali soil or have their equipment and personnel seized. This moratorium gives Somalia the required time to study its resource potential, effectively build and mature a capable energy ministry, regional revenue sharing agreements, environmental regulations, and a robust nationalistic oil law that will ensure all Somalis benefit as well as prove Somalia to be an attractive place to do business. It is essentially Somali resource development on Somalia’s terms and schedule.

People must understand that Somalia is bigger than any one person, and the days of “advisors” and “consultants” running around European and American cities selling Somali oil deals for a quick pay day are surely coming to an end. This moratorium will expose, isolate and bring to justice those that are engaged in selling the country’s resources and their souls for a few dollars. Somalia has coped thus far without oil, and a few more well spent years building and perfecting the necessary regulatory frameworks for a successful energy industry will be the difference between either a situation like that of Nigeria or that of Norway, the latter arguably being the world’s best developed oil regime.

Work with the Central Government

The regional Somali governments must realize that a national energy policy governs their territories, no ifs, ands or buts. There is neither time nor room for their “one foot in, one foot out” strategy when it comes to dealing with Mogadishu. You are either in the federation or you are out, full stop. There is only one internationally recognized government representing Somalia and any oil deals not approved by federal parliament will be deemed invalid. Any foreign oil company accused of attempting to usurp and undermine the federal government and parliament’s approval process by dealing directly with regional governments should be brought to trial (the EAEF has already prepared a few of these legal cases) and dealt with harshly to discourage others from following suit.

Somalia’s Economy Doesn’t Need Oil

I was recently confronted by a foreign oil consultant as to why I advocate for leaving Somali oil in the ground for now since, according to him, oil reserves could be the driving force of Somalia’s future economy and would lift people out of poverty. He said that the EAEF was selfish for encouraging this policy. To the contrary, under current corrupt Somali oil practices and frameworks, the general public would receive absolutely nothing from those contracts, with only a few signatories cashing in bonuses as has become the norm.

But even if abundant reserves are discovered, the Somali economic resurgence doesn’t depend on oil, or the government, or the billions in foreign aid, rather it will be driven by the esteemed entrepreneurial acumen and business aptitude of the general Somali public. It will depend on the reconstruction of the country (of which we have already seen), the investment and brain gain that would result in the return of a homesick, patriotic diaspora and the assurance of stability and security however fractious, will all cause the return of Somalia to economic prosperity. Oil reserves in Somalia will just be the icing on the cake.

As Somalis, there are more important things we need to focus on in the first term of this new central government such as capacity building, transparent government and civil institutions, infrastructure, reliable armed forces, sending the indoctrinated Somali militant youth to schools, disarming the population, etc. We are far too busy now as a country to focus on oil and gas. In the meantime groups like EAEF will do their best to guard our resources until we are ready to exploit them. We have too many examples of how oil can go wrong in Africa, and with Somalia’s new found political resurgence gaining steam, we are hell bent on protecting Somalia’s resources and getting it right...the first time!

By Abdillahi Mohamud

The author is the Managing Director of the East African Energy Forum (EAEF), an international lobby group that works to protect Somalia’s energy resources. He can be reached at: [email protected]

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