Will the majors return to Somalia?
Offshore October, 1995, Pg. 8, Dev George
Before President Mohamed Siad Barre was overthrown and Somalia descended into chaos, his government granted exploration and production concessions to Amoco, Chevron, Conoco, and Phillips. The action was taken with the hope that Somalia's potential oil reserves might earn enough to relieve not only the current famine, but finally bring that impoverished nation a degree of development and affluence.
Thomas E. O'Connor, the World Bank's principal petroleum engineer, says there is no doubt of the presence of oil off Somalia's northern coast in the Gulf of Aden, only how much. "It's got high potential, but you don't know until you study a lot further just how much is there."
Several other geologists at a 1991 London conference listed Somalia and Sudan as top prospective commercial oil producers "situated within and thus highly prospective for gas and oil."
The concessions to major oil companies came, however, before these appraisals of the country's prospectivity, in 1986. They were attracted to the country primarily as a result of Hunt Oil Company's successful exploration in Yemen, across the Gulf of Aden. There, a billion bbl reserve was discovered. That discovery is believed to be a part of an extensive geological rift that acres across the Gulf and into Somalia. (Hunt's Yemeni field is now producing more than 200,000 b/d).
But little has come of Somalia's E&P awards since anarchy spread throughout the country. There is no government with which to deal nor any law other than that enforcing the edicts of local warlords. Even the failed US humanitarian effort made little difference.
Of the four majors given concessions, only Conoco has maintained the semblance of a presence in Mogadishu. "We had these very good shows," a Conoco official said. "That's why Conoco stayed on." The company is believed to have negotiated with Ali Mahdi Mohamed, one of the main warlords, to allow it to remain. The others majors declared force majeure and abandoned their exploration operations.
Now, however, the question is whether they will be allowed to take up where they left off once order is reestablished in Somalia. The situation indeed has not returned to what it was before anarchy swept the country, but it has calmed somewhat, and leaders are emerging that may evolve into Somalia's new government.
All records of contracts and agreements with the Siad Barre government have disappeared, but if the majors want to return, now may well be the time to begin overtures. With Conoco on the ground already, it may take the first tentative steps. Somalia still needs the revenues.