Somalia favours firms with pre1991 deals for oil exploration

[Barwaaqoiyobashbash]

Somalia favours firms with pre-1991 deals for oil exploration

Wednesday, October 03, 2012
By Sarah Young



LONDON Oct 2 (Reuters) - Somalia, hoping to share in East Africa's oil and gas boom, has invited back international oil companies that held exploration licences before civil war broke out two decades ago, an adviser to the government said.
Abdullahi Haider, a senior adviser to Somalia's Ministry of Energy, said the country would honour contracts signed prior to 1991 with oil majors including Royal Dutch Shell, BP and Chevron.

"They will be given priority," Haider said of the companies that had signed exploration deals before the conflict.

Somalia will offer onshore and offshore exploration blocks to companies in a licencing round early next year, Haider added, a process that would enable new companies to come to the country as well as those with permits from the 1980s.

"I've seen so many people who are very much interested like Shell, like Chevron. I've met them here and they expressed very high interest," he said in an interview on the sidelines of a conference in London on Tuesday.

The government had sent a letter to the companies inviting them to come and negotiate on new contract terms, he added.

Somalia inaugurated a new president in mid-September in the first such ceremony for over 20 years, prompting hopes that it had turned a corner after a regionally-brokered, United Nations-backed effort to end fighting in which tens of thousands of people were killed.

The country hopes exploration by major oil companies will enable it to participate in the excitement over a string of discoveries in East Africa that have aroused expectations the region will become an important energy supplier.

Should companies choose to return, they will negotiate with the government over converting the old royalty-based contracts into production sharing agreements.

Any companies that signed oil exploration deals after 1991 could negotiate but would not be given priority, he said.

Somalia also hopes to resolve a maritime border dispute with its southern neighbour, Kenya.

The disagreement between the two has threatened to upend some exploration rights that Kenya has granted to oil and gas companies including France's Total and Texas-based Anadarko.

"This dispute can be regulated in a friendly way," Haider said.

[Arabmann]

It's the illegitimate government that favors, not the masses.

[blackstars25]

Somalia should give concessions to these oil giants to start exploration immediately, in exchange Somali gov could get hundreds of millions upfront, which they could use to beef up the state/army. This is the easiest way for the government to get income, Somalia shouldn't haggle over contract terms and profit ratios at this time, they should just take whats on the table and run with it.

[X.Playa]

Big mistake , because most of these companies signed contracts with the last desprate regime in the 1980's just to get some weapons to keep Afweyne in power, honoring these terms is a disastor, puntland will have non of it and somaliland is gone , and 90% of the land that was explored in the 1980's lays in these areas.

[blackstars25]

^I don't think you understand the significance of honoring contracts.

Companies don't do business with governments that don't fulfill their contracts. Iraq still honors contracts that were forged in the Saddam-era and still pays reparations etc, no reason Somalia shouldn't. Don't think it's a big deal anyway, Somalia could actually see more benefit from it.

[X.Playa]

They were not contracts they were robberies. no body honors robbery paper.

[original dervish]

they were only exploration concessions and these have lapsed long ago.
if the government wants to raise revenue immediately they should institute a communications tax, which can be collected directly from the telecom companies.
estimated revenue 300million dollars anually.

whatever happens there must be a panel of experts to negotiate these contracts, not former taxi drivers and policemen.

[PrinceDaadi]

Should companies choose to return, they will negotiate with the government over converting the old royalty-based contracts into production sharing agreements.

Maybe some of you r not reading the article, these companies will only get priorities but old contracts r invalid, what is more these big multi Nationals have got capital as well as expertise.

[original dervish]

We need qualified industry professionals to negotiate/advise in any contract talks.
The minutes of such meetings must be made public.

There should be no rush, we`ve waited decades for a functioning government a few more years wont do us any harm.

[Arabmann]

^I don't think you understand the significance of honoring contracts.

Those contracts are null and void, therefore, shouldn't be honored.