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Somalia Seeks Foreign Investment in Energy Sector – Big Oil Cautious

Oil companies are renowned for going into hostile environments in their relentless search for the world’s seemingly insatiable thirst for “black gold.”

That said, there remain a few nations where even the intrepid masters of the universe hesitate to tread.

In Central Asia, it is Afghanistan, despite the nation’s purported 1.6 billion barrels of extractable crude.

In Africa, it is Somalia, poster child for failed nation states since President Siad Barre was ousted in 1991. Over the past two decades, the wretched country has only known civil war, chaos and famine.

But, no matter, never mind al Shabaab. During the 7 October Somalia Oil and Gas Summit in London, Somali Minister of Finance and Planning Mohamud Hassan Suleiman encouraged foreign investors to "seize the opportunity" to invest in Somalia’s flat-lined energy sector. Suleiman told a wary audience, "The discovery of oil and gas in Somalia opens up an array of hope and opportunities for the new Somalia, enabling it to influence the pace of economic recovery and the future stability of the country. International investors and multi-national corporations are turning their attention to Somalia and we must now seize the opportunity and work with them.”

Related article: Don’t Be Fooled by Libya—This is a Failed State

Suleiman added that the Somali government recently revised the country’s Investment Law to make Somalia "investment friendly."

So, who is bringing this cheery news to potential foreign investors?

According to the Sabahionline.com website, “The Sabahi web site is sponsored by the United States Africa Command, the military command responsible for supporting and enhancing US efforts to promote stability, co-operation and prosperity in the region. Sabahionline.com features news from across and about the Horn of Africa region and features analysis, interviews and commentary paid by Sabahionline.com correspondents. The goal of Sabahionline.com is to offer accurate, balanced and forward-looking coverage of developments in the Horn of Africa region. It is designed to provide a regional audience with a portal to a broad range of information about future stability in the region and promote discussion on the wide range of topics affecting the region.”

Aside from being a puff PR piece for the Pentagon, what’s really going on in the Horn of Africa’s basket case?

Well, Turkey’s Genel energy has been prospecting onshore in Somalia’s essentially autonomous Somaliland region for the past year. Genel Energy said in a statement, "Because of its similarities with the geographical structure of the Arab peninsula, it is strongly predicted that Somaliland, a region Genel Energy prioritizes for its investment program, has important coal and oil assets."

Otherwise, apparently no takers.

Any potential?

Related article: Oil Seen as a Bridge to Peace between Sudan and South Sudan

According to a 1992 Library of Congress study, “Throughout the 1980s, various international oil companies explored for oil and natural gas deposits in Somalia. In October 1991, the World Bank and the UN Development Programme announced the results of its hydrocarbon study in the countries bordering the Red Sea and the Gulf of Aden. The study indicated the potential for oil and gas in northern Somalia was good. In view of the civil war in Somalia following the fall of Siad Barre, however, various foreign oil exploration plans were canceled.”

But, back to London. According to Somalia Ministry of Natural Resources adviser Abdullah Haider, Somali officials have discussed having Royal Dutch Shell, Exxon Mobil, ConocoPhillips, ENI and Chevron return to the East African nation, with Haider observing, "Most of the discussions are going well."

No word as yet as to al Shabaab’s position on the discussions.

The final word is from the U.S. State Department, which noted in a 2010 report, “Members of extremist antigovernment groups, and the al-Shabaab terrorist organization, some of whose members were affiliated with al-Qaida, committed an increasing number of egregious human rights violations, including killings of TFG officials and civilians; kidnappings and disappearances; attacks on journalists, aid workers, civil society leaders, and human rights activists; restrictions on freedom of movement; and displacement of civilians.”

Enough to give even the most hardened Houston oilman food for thought despite Suleiman’s encouraging foreign investors to "seize the opportunity."

By. John C.K. Daly of Oilprice.com




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