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Somalia welcomes oil interest, says no China talks

Somalia’s oil and gas potential attracted attention from Western major oil producers before the country collapsed in chaos in 1991, and diplomats say Asian firms have shown recent interest amid efforts to stabilise the Horn of Africa country.

Somalia lies across the Gulf of Aden from the Arabian Peninsula and next to Ethiopia’s Ogaden region, which has proven reserves of natural gas.

Yusuf, trying to build an effective central government following his election by lawmakers at peace talks last year, told Reuters in an interview: “Any company that is interested in the natural resources of Somalia can come (to talk) to the government, no matter from which country.”

“After all, we will look after our interest. Let them compete, and the best company will win,” he said during a visit to Nairobi en route to Saudi Arabia to discuss possible aid for Somalia.

Somalia has no proven oil reserves and only 200 billion cubic feet of proven natural gas reserves, according to the US Energy Information Administration.

However, companies including Total, Amoco, Chevron and Conoco and Phillips, which have since merged into ConocoPhillips, held exploration concessions in northern Somalia in the 1980s.

The firms declared force majeure following the collapse of the central government in 1991. Force majeure is a clause in a contract exempting the parties from their obligations under the agreement as a result of conditions beyond their control.

Former government officials said they were negotiating energy deals with about 12 foreign companies in the late 1980s, but the contacts ended when the overthrow of former dictator Mohammed Siad Barre in 1991 triggered a civil war.

Hundreds of thousands of Somalis have died from famine, disease and violence since then. Analysts say the war has left a complex legal legacy. Some of the old exploration concessions were in a part of northern Somalia that is now within the territory of Somaliland, which declared independence from the rest of Somalia in 1991.

Somaliland, which is not recognised internationally, is also seeking to develop its energy sector but must try to avoid conflict with the earlier accords signed by the internationally recognised pre-war Somali government based in Mogadishu. Asked whether he was in a position to decide what to do with the previous oil exploration agreements, Yusuf replied that he needed more information before he could address the issue:

“I never read these contracts,” he said. “I don’t know if they are contracts previously agreed with the late Somali government or not. I have to see documents. If these companies have documents, they have to show us.”

Some diplomats have said that now Somalia may become more politically stable, government officials from energy-hungry China have been talking to Yusuf about the possibility of helping develop the country’s energy sector.

Yusuf denied this. “It’s not true,” he said. “Nobody talked to us and asked us about oil in Somalia.”

Asked to comment on China’s relationship with Somalia, the foreign ministry said in a statement to Reuters in July: “The Chinese side is willing to take an active part in Somalia’s economic reconstruction and explore the possibilities of all kinds of cooperation with the Somali side.”—