Somalia oil deal for China.

[Som@li]

Somalia oil deal for China

By Barney Jopson in Nairobi

 

Published: July 13 2007 22:02 | Last updated: July 13 2007 22:02

 

The Chinese state oil giant, CNOOC, has won permission to search for oil in part of Somalia, underlining China’s willingness to brave Africa’s most volatile regions in its hunt for natural resources.

 

Somalia has been a no-go area for US oil companies since it descended into anarchy in the early 1990s. This year the capital, Mogadishu, has seen its worst violence in 16 years as insurgents seek to topple a fragile interim government.

 

But CNOOC has not been deterred and last month met Somali government officials in a Nairobi hotel to hammer out the details of its planned survey work, which is due to begin in September.

 

Chinese state-owned companies have become a heavyweight presence in Africa as the country seeks to secure resources for its booming economy as well as market access for its own goods and services.

 

CNOOC, China’s largest offshore oil and gas producer, has been at the vanguard of the drive: it constructed oil pipelines in southern Sudan in the late 1990s even as a civil war raged between separatist rebels and the Islamist regime in Khartoum.

 

The Chinese company’s deal with Somalia’s transitional federal government gives it exploration rights in the north Mudug region, some 500km north-east of the capital.

 

CNOOC and a smaller group, China International Oil and Gas (CIOG), signed a production-sharing contract with the interim government in May 2006. The contract, which gives the government 51 per cent of oil revenues, was endorsed at last November’s China-Africa summit in Beijing.

 

At a meeting in Nairobi on June 24 – a record of which has been seen by the Financial Times – parts of the agreement were clarified by Abdullahi Yusuf Mohamad, the Somali energy minister, Chen Zhuobiao, managing director of CNOOC Africa, and Judah Jay, managing director of CIOG.

 

According to the US Energy Information Administration, Somalia has no proved oil reserves and only 200bn cubic feet of proved natural gas reserves, which have not been tapped.

 

In the late 1980s exploration concessions were held by companies including Conoco and Phillips, which have since merged; Amoco, now part of BP; and Chevron. They fled the country after dictator Mohamed Siad Barre was overthrown during civil war in 1991.

 

The data collected by oil companies has formed the basis of interest in Somalia today. Range Resources, an oil group listed in Sydney, estimates that the Puntland province – which includes the Mudug region – has the potential to yield 5bn-10bn barrels of oil.

 

Puntland is semi-autonomous and relatively stable compared with Mogadishu, where insurgents are launching near-daily assaults on the government and its Ethiopian military backers.

 

A reconciliation conference due to open on Sunday is expected to attract still more attacks.

 

The government is preparing a new national oil law even though its authority across the country is limited. Its decision to grant CNOOC exploration rights in Puntland could spark a dispute with the local authorities, which have given Range Resources exploration rights elsewhere in the province.

 

A western diplomat who follows Somalia from Nairobi cautioned that he had seen copies of three similar deals signed by the interim government in the past two years. “If there is ever enough peace and stability to allow oil to be extracted, there’ll be a huge [argument over the agreements] down the line,” he said.

 

Copyright The Financial Times Limited 2007

 

Source

[5]

Isn't this illegal? I always thought of the current Somali government a temporary one. It certainly wasn't elected by the people. Odd it should make agreements which could potentially have huge impacts on Somalia's economy.

[Som@li]

The word "Illegal" is NOT in TFG dictionary,they can be in human organs trade if they want to.

[Jacaylbaro]

loooooool

[Allamagan]

Monkey business going on there all the time. Completely illegal.

[5]

Originally posted by Dabshid:

The word "Illegal" is NOT in TFG dictionary,they can be in human organs trade if they want to.

Hey! Don't trash people whose jobs' side effect is saving people.

[Som@li]

^^what people?

[Legend of Zu]

^^^How is it Illegal? tell us...enlighten us?

 

Cheers

[-Nomadique-]

I think there is a strong case to argue that the Transitional Federal Government does not have the authority to negotiate such an agreement and that the signatories representing the TFG had no authority to sign this contract. Only a popularly elected Government would have the mandate to enter such agreements.

[Socod_badne]

I'm not least bit perturbed by this deal. Governments can be overthrown with the new government nationalizing oil/gas industry.

[5]

Originally posted by Dabshid:

^^what people?

Human organs traders

[Som@li]

Are u in that business!

[5]

Originally posted by Dabshid:

Are u in that business!

No, I would unfortunately corrupt it.

[Som@li]

Chinese gamble on finding oil in hostile Somalia

By Barney Jopson, Financial Times

Published: July 27, 2007, 23:42

 

Nairobi: CNOOC's willingness to strike an oil deal with the fragile government of Somalia, which has been a failed state for more than a decade, has provided stark evidence of China's willingness to brave terrain that western oil majors deem too treacherous.

 

The state-owned Chinese oil giant has signed a production-sharing deal with the transitional federal government in the east African country, which ranks as a high-risk frontier even in an industry well accustomed to dangerous environments.

 

In doing so, CNOOC and its smaller partner, China International Oil and Gas, are gambling on three points. First, that the interim government has the authority to make such deals and will stay in power.

 

Second, that violence stemming from perennial inter-clan conflicts and more recently Islamist extremism will not derail its work. Third - and most fundamentally - that the country has some oil worth extracting.

 

Several western oil majors held exploration concessions in Somalia in the 1980s but fled in 1991 when the overthrow of dictator Mohammad Siad Barre ushered in 16 years of chaos.

 

Sharing production

 

Ali Mohammad Gedi, Somalia's interim prime minister, said last week that ConocoPhillips, Chevron, BP, Royal Dutch Shell and Eni would be invited to return and change their concessions into production-sharing agreements under an oil law due to be published in the next two months.

 

But that looks like a distant prospect. BP, Shell and Eni say they still consider the concession deals to be subject to force majeure - code for unexpected and disruptive events that prevent contractual obligations from being met. Chevron and ConocoPhillips have declined to comment.

 

Thomas O'Connor, chairman of Benchmark Oil and Gas and a former World Bank oil engineer who studied Somalia, said: "Many of the companies there in the 1980s have been subsumed into others and the bigger they get the more conservative they become. The super majors will likely talk about it internally, but my guess is the legal counsels will say 'No, let's wait until the dust settles'."

 

Chris Brown, a sub-Saharan Africa analyst at Wood Mackenzie, a consultancy, says: "The big issue at the moment is there are three different governments issuing exploration contracts, hence the legitimacy of these licences may be thrown in doubt if there were to be any change in the political landscape."

 

The government of Somaliland, a northern province that considers itself independent, struck a production-sharing agreement with Ophir Energy in 2003. The government of the semi-autonomous Puntland province has given Range Resources of Australia and Canmex Minerals of Canada joint exploration rights in part of the region.

 

Political challenges

 

CNOOC's deal - details of which emerged last week - covers another part of Puntland and was endorsed by President Abdul Lahi Yousuf Ahmad, who hails from the province, even though the transitional government's authority there is tenuous. The prime minister himself has questioned the validity of the Chinese agreement because it was signed before the new oil law is in place.

 

O'Connor says: "Big oil companies are loath to go into dodgy areas where they don't have good contractual relationships. But the Chinese are taking the view, 'Let's just do it and deal with the consequences later.' It's buccaneering."

 

CNOOC has acquired a reputation for risk-taking - a reflection of the fact it is ultimately serving China's strategic need for oil rather than purely commercial objectives.

 

Insecurity in Somalia was underlined last Thursday when the reopening of a conference intended to promote reconciliation between the country's clans, warlords and political factions was marred by bomb attacks that killed at least five children near the Mogadishu venue.

 

Range Resources estimates that Puntland has the potential to yield five billion to 10 billion barrels of oil. The US Energy Information Administration, however, says the country has no proved oil reserves.

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[man_in_malaysia]

Do we need that now? somalia gov should solve basic issues: peace iyo wixi kale oo lamid ah.