Somali govt offered offshore blocks in London. Kenya jumped on it. Now Somalis are worried about their country’s territorial integrity.

By The Star Staff Writer

MOGADISHU – For weeks now the Somali government has publicly insisted that all it did during a recent oil and gas conference in London was to share the country’s seismic data with foreign investors, and not to launch an offshore bid round as many people said.

But when more details demolishing the official line emerged, the weak government found itself in the middle of a problem that could have easily been avoided if it had told the truth in the first place: An angry public and a Kenyan claim that it sold its offshore blocks to the “highest predatory bidders.”

Kenya had already expelled Somalia’s Ambassador to Nairobi and recalled its envoy to Somalia. It’s now demanding the withdrawal of the Somali maps presented at the London conference and an “appropriate” apology from Mogadishu.

“What next depends on what happens,” said Kenya’s Foreign Affairs Secretary Monica Juma in a threatening tone last week. “I don’t think I want to speculate on what next.”

Juma said “countries have gone to war for far less than this.”

Kenyan’s sharp rhetoric has raised questions about its real intention, with some analysts saying it’s hard to believe that Nairobi’s anger is all about the maritime dispute between the two nations that is being adjudicated by the International Court of Justice. Some Somalis argued that their government’s decision to offer offshore blocks in London may have exposed a clandestine plan by Kenya to lay claim to a new Somali territory in addition to the Somali region it’s been occupying since the 20th century.

In 2011, Kenya invaded southern Somalia under the pretext of fighting the Shabab militants, whom it accused of carrying out a series of attacks on its soil. The Kenyan troops, who later joined the African Union peacekeeping mission in the country, prop up the Kismayo administration led by Ahmed Mohamed Islam, better known as Ahmed Madobe, who has little ties to the Mogadishu-based national government.

Many Somalis suspect that Kenya’s dramatic escalation is nothing but a scheme to force the leaders of the Horn of Africa nation into an out-of-court settlement for the maritime dispute.

Both Somalia and the Norwegian company, Spectrum Geo Ltd., which shot the seismic data presented at the London conference, said no Kenyan offshore blocks were put up for auction during the licensing round. Spectrum carried out two seismic surveys that covered 40,000 kilometers of Somali waters.

“All of this seismic data was acquired wholly within the maritime territory of the Federal Government of Somalia and no data were acquired within the area currently the subject of the maritime delimitation case with Kenya,” said Graham Mayhew, Spectrum Geo’s executive vice president for Africa, mediterranean and the Middle East, in a statement.

The biggest victim of the current flap, however, is the Somali government: Now that its secret bid round in London came to light, Somalis are demanding satisfactory answers to what actually happened in the U.K.: Who, for instance, actually organized the conference, especially after the government’s claim that it’s the organizer or at least a co-organizer was debunked by an official letter by Spectrum Geo that clearly showed that Somali officials were, like others, invitees.

The Somalia Star’s attempts to get answers for these and many other questions were successful, as Spectrum, the organizer of the London conference, declined to answer specific questions we sent them via email.

“The extent of our involvement with last week’s conference was simply to assist in the logistics of staging the event,” said Duncan Woolmer, Spectrum’s head of marketing, in a short email to The Star.

“Unfortunately, there seems to be some misunderstanding of the role played by Spectrum,” Woolmer said. He didn’t response to follow-up questions we sent to his email address.

Spectrum’s equivocation dovetails with the Somali government’s strategy of downplaying the significance of the London conference.

“It’s an oil exhibition,” said President Mohamed Abdullahi Mohamed Farmajo in a speech delivered on the same day the bidding opened in London. “… I affirm that the government I am presiding over is not a commercial government. It’s not a commercial government. We differentiate between commerce and public service.”

The president said the previous government had contracted a foreign company to collect the nation’s seismic data, and that it’s unwise to keep the information without putting them to good use. “We won’t keep the data,” he said. “We’ve to exhibit it. It has to be analyzed to verify whether what the data says is true or not.”

But remarks by Petroleum Minister Abdirashid Mohamed Ahmed and presentations by Spectrum experts told totally a different story: the auctioning of 15 Somali offshore blocks.

Ahmed told participants of the London conference that the bid round was “the first ever” event of its kind to be held “inside or outside the country.”

“Therefore, this launch will be a landmark event in Somalia’s history,” Ahmed said. “This will be a clear sign for all of you that Somalia is going to be a new frontier country for oil in the region.”

Ahmed thanked “all participants who eagerly responded” to Somali government’s announcement in Cape Town, South Africa last November last year in which it promised to hold a bid round in London on Feb. 7.

During last year’s Africa Oil Week, Karar Shukri Doomey, the director general of the Petroleum Ministry, told CNBC Africa, a South Africa-based business channel, that Somalia was planning to launch “the first its kind bid round or licensing, if you like, of multiple acreages” – to be precise, 206 blocks.

“We will be auctioning some of the most prospective blocks in the southern parts of Somalia,” he told a CNBC Africa reporter in South Africa.

Doomey said the blocks that Somalia was selling are “far out” to sea. “Currently there shouldn’t be any concern” about security or fears of investing in these blocks, he said.

“We’ve had quite substantial talks with some of the biggest players in oil and gas industry,” he said, noting that Somalia’s location makes it “super-strategic.”

“There’s potential for big, big discoveries,” he said.

So why the government decided to open a licensing round and conceal it from the Somali public?

“Because there was no legal frameworks to govern the bid round: There was no petroleum law. There was no national oil company. The public has no idea about the fiscal terms presented to international oil and gas companies,” said Jamal Qassim Mursal, who was the Petroleum Ministry’s permanent secretary until last January, when he resigned.

Mursal said It was a “predetermined government plan” to launch an offshore bid round in London.

“The companies that came to the London conference didn’t come to view data,” he said. “They came to participate in the bid round and learn more about the terms of reference, the fiscal terms, the petroleum law, the blocks on offer and other tender details, which were all presented at the conference.”

Screens in the conference hall, including the one of the digital lectern used by the petroleum minister, Ahmed, clearly showed “Licence Round Somalia 2019.”

Also, one of the slides read “Process of the Tender Protocol (TP) Brief.” Another slide showed “Effective dates,” such as when the bidders will be notified of the result of their application and of the final date for the signing of the Production Sharing Agreement by the bidder.

A slide titled “Number of Blocks offered in the first round in London” said the Somali government’s share was pegged at 54 to 66 percent because the production sharing agreement was “designed to be highly competitive to attract companies to the bid round.”

The coverup has already sparked a national debate about the sincerity of President Farmajo’s administration amid fears that there may be a collusion between Somali officials and Spectrum to pillage the country’s offshore resources away from the public glare.

“The Somali government boxed itself into a corner when it lied to the public and launched unpopular bid round. Now everyone is talking advantage of it,” said Yahya Amir, a former dean of Mogadishu University’s faculty of economics and management sciences and now external examiner at Norwegian University of Life Science. “The only way out of this is to be transparent and tell the truth. The government can’t keep contradicting itself.”

Days before the bid was opened in London, the Petroleum Ministry issued a statement dubbing the U.K. event a “conference” and denying incessant media reports that the aim of the gathering was to offer offshore blocks.

“Our oil resources will be displayed at the conference. It’s not true that blocks will be auctioned at the conference,” said the ministry’s statement on Jan. 26.

The Somali public would be informed about any bid round “in a transparent manner,” said statement.

The government didn’t fulfil that promise. The state-owned Somali National TV and Radio Mogadishu gave the London conference a wide berth, even though other privately owned and international, Somali-language media outlets extensively covered the bid and held talk shows on its consequences for Somalia.

Kenya seized on the opportunity and jumped on Somalia, accusing it of an “act of aggression,” and “unparalled affront and illegal grab at the resources of Kenya.” Although Kenya has not produced any hard evidence to support its allegations, its intrusion into what was absolutely an internal Somali affair was seen by many as a dexterous push by Nairobi to squeeze some sort of concession from Mogadishu.

Angered by Kenya’s claim to a Somali maritime territory, the Somali government sued Kenya in the ICJ in 2014, requesting the U.N.’s principal judicial organ “determine, on the basis of international law, the complete course of the single maritime boundary dividing all the maritime areas appertaining to Somalia and to Kenya in the Indian Ocean, including the continental shelf beyond 200 [nautical miles]”.

Somalia also asked the court to “determine the precise geographical co-ordinates of the single maritime boundary in the Indian Ocean.”

Fearing that it could lose the case, Kenya has been pressing for direct negotiations with Somalia, which resisted such overtures, saying that numerous talks that preceded its decision to sue Kenya in the ICJ yielded no results.

The bid round has alarmed many Somalis, who were already worried about Kenya’s interference in their country. Somalis started to wonder aloud how a fragile government that depends on foreign forces for its survival could preserve the nation’s sovereignty at offshore wells dozens of miles out to sea. Will the government, for example, allow multinational companies to bring their own forces to the country to guard their installations? Will an Ethiopian navy – as some Somalis suspect — chip in and guard the blocks? Will the desperate, unpopular ruling elite steal the money it earns from the bid round, such as the signature bonuses, to finance the upcoming presidential election?

Mursal, the former permanent secretary, said the bid round was rushed and the government put the cart before the horse.

“The right procedure was to have a petroleum law, a tax law and other necessary laws and regulations and then harmonize them with the constitution,” said Mursal, speculating that foreign companies would be skittish about investing in a country without a petroleum law as that will put their invest in a grave uncertainty.

The Somali Cabinet revoked the nation’s first post-war petroleum law in September 2017 and approved a new one, which is yet to be subjected to a vote by lawmakers.

Somalia’s challenges, however, aren’t the lack of legal frameworks. The country hasn’t fully recovered from decades of civil war and lawlessness and some oil companies seem to be exploiting that.

For instance, Somalia signed its first post-war agreement in 2013 with Soma Oil and Gas Exploration Ltd, a U.K.-based company that many Somalis believe was created to plunder the nation’s resources. This move came after Mogadishu voided agreements between international companies and regional administrators, especially in northern regions.

Now the Somali government is in a catch-22 situation: Even if it proves Kenya wrong, it still has to grapple with an irate Somali public that has little trust in its pronouncements.

The government’s P.R. problems are also likely to mount as plans are afoot to hold a second bid round in Turkey to be followed by another in the U.S. city of Houston.

“The Somali government can’t forever hide facts from the public,” said Osman Qooh, who was a part of the hundreds of Somalis who staged a demonstration in front of the hotel that hosted the bid round. “The best it can do now is either to cancel the bid altogether and win back some of the public’s trust or keep hiding it and suffer a public backlash that can cost it dearly because Somalis are united in their rejection of the bid round.”

Qooh said when a government is transparent it’s easy to detect the loopholes of its agreements with other countries and entities.

“Deals done in the dark will always lead to more social, political and security problems for the country,” he said.

Since the early 2000s, when Somalia shed the tag of “transitional”, officials has been saying that the country would launch an onshore and offshore licensing round.

On Oct. 2, 2012, Abdullahi Haider, who was then a senior adviser to Somalia’s Ministry of Energy, told Reuters news agency that Somalia had invited back international oil and gas companies that held exploration licenses before the civil war, such as Royal Dutch Shell, BP and Chevron. He said those companies would be “given priority.”

Corrupt Somali officials have also proposed naive approaches to attract international investors to the country’s resources.

In 2012, during the London Conference on Somalia, Former Prime Minister Abdiweli Mohamed Ali Gaas told the Observer newspaper that “the only way we can pay [western companies] is to pay them in kind, we can pay with natural resources at the fair market value.”

Now it’s too early to predict whether international oil and gas companies would ignore the flashing warning signs and apply for the offshore blocks in a dangerous nation.

“But,” Qooh said, “if there’s one thing that the bid round in London has exposed, it’s the fact that the current administration in Mogadishu is as corrupt and untrustworthy as its predecessors.”