18 February 2019

Somalia: Govt Denies Selling Any Kenyan Oil Blocks

Photo: allafrica.com
From left: Recalled Kenya's envoy to Somalia Lieutenant-General (Rtd) Lucas Tumbo and expelled Somali envoy to Kenya Mohamoud Ahmed Nur alias Tarzan.

Somalia says it has not auctioned any oil blocks in a disputed section of the Indian Ocean, contrary to claims by Kenya that resulted in the summoning of its ambassador to Mogadishu.

Last evening, Somalia's Foreign Minister Ahmad Isse Awad said in a diplomatic response: "Somalia is not now offering, nor does it have any plans to offer, any blocks in the disputed maritime area until the parties' maritime boundary is decided by the ICJ (International Court of Justice).

The response, filed through the Kenyan Embassy in Mogadishu, was a letter written in uncharacteristic diplomatic format, taking on first person plural instead of the usual third person.

By the time of going to press, Nairobi was yet to receive the letter.

"The government of Somalia wishes to reassure the Government of Kenya that it stands by its commitment not to undertake any unilateral activities in the disputed area until such a time as the ICJ renders its judgment," the minister added.

INVESTORS

Mogadishu was referring to a case in which it sued Kenya at the international court, where Kenya is seeking to have the maritime border between the two to run parallel to the latitude eastward south of Kyunga. Somalia wants it to run diagonally, as an extension of the land border.

But the actual cause of friction is a presentation made last week by the Somali Federal Ministry of Petroleum and Mineral Resources, depicting a profile of its oil stock to investors in London, in which it promised better returns for those who would take up the offer.

In the document, the Somali government offered the blocks to investors, buoyed by seismic data gathered by consultancy firm Spectrum Geo.

Under the Protocol, investors have until July 11 this year to apply to be qualified for consideration, after which there will be three months of interaction to determine the final agreement on revenue sharing.

The offer also says consortiums should be formed by October 17, before successful bids are notified by November 7.

The winners will then be asked to sign agreements on production by December 9.

REVENUE

The Somali government was marketing its oil stock to investors by offering what it called better production sharing agreements (PSA).

In oil production, PSAs are special contracts that explain the percentage share of oil or revenues the government and extraction firms get. Sometimes it can be 50:50.

In the case of Somalia, Mogadishu offered "a very modest production share" based on the revenue factor, including signature bonuses of up to $2 million (Sh200 million) or more for oil.

"The contract includes fiscal stability provision, guaranteeing that the terms will not change, except for generally applicable tax changes at non-discriminatory rates," the Somali delegation led by Petroleum Minister Abdirashid Mohamed Ahmed offered.

Mogadishu will gain up to 15 percent in royalties, and the revenues are determined based on the number of barrels extracted.

The 15 oil blocks are mainly in Somali waters, far north of Kenya's contested line.

TERRITORY

But three of them are in an area labelled as the Juba-Lamu Basin, considered by consultants as the Southern Zone.

"In the south, the underlying colder oceanic crust lets the temperature rise only slowly with depth, such that the main source rocks that are more deeply buried (3-4 km) in this region are serendipitously still generating oil today," a report by Spectrum Geo says.

Somalia argues that even if the boundary line were to follow Kenya's plea before the ICJ that it run parallel eastward, the three blocks will still be in its territory.

If the ICJ rules in Mogadishu's favour, the blocks will still be in Somali territory.

The Kenyan government, for its part, released a map showing blocks L21, L23, L24 and L25 in the disputed area as the same ones Somalia offered up for bids.

These blocks are in an area about 100,000 square kilometres in a triangle east of the Kenyan coastline.

RELATIONS

As the ICJ decisions are binding, Kenya could lose the entire blocks in the disputed area if it loses the case.

But there were indications that relations between the two countries will not be ruined by the dispute.

On Saturday, Kenya's Foreign Affairs Principal Secretary Macharia Kamau announced that Nairobi had summoned its envoy to Mogadishu, Mr Lucas Tumbo, and asked Somalia's Ambassador Mahmud Ahmed Nur to go back "for consultations" over his country's decision to "auction" oil blocks belonging to Kenya.

Yesterday, he urged the Somalia government to take the matter seriously.

"We urge Somalia to take seriously the concerns we have raised as a country. If what our claim [on the auction] did not happen, then it takes no harm to pick up a phone and straighten things up or drop a note and clarify issues," he said, denying claims that the government had either recalled its ambassador from Somalia or expelled Somalia's ambassador to Kenya.

SUMMONS

Both Nairobi and Mogadishu climbed down from the undiplomatic language seen in Mr Kamau's press conference on Saturday, with the PS explaining that the summoning of ambassadors was merely a chance to get "credible" information on the situation.

In fact, summoning diplomats is a usual political protest which does not go beyond a verbal protest, often sanctioned by the president.

In the Kenya-Somalia case, both embassies will continue to operate normally, as seen when the Kenyan embassy received the note verbale (diplomatic letter) from Mogadishu.

On the other hand, recalling or expelling an ambassador is a stronger protest that could lead to a breakdown of diplomatic relations.

For example, South Africa recently recalled its envoy to Rwanda following a slur supposedly published by a Kigali newspaper targeting Pretoria's Foreign minister.

Meanwhile, a committee of Somalia's Upper House put out a four-point statement on the issue.

Speaking in Nairobi, Senator Ilyas Ali Hassan, the chairperson of the Committee on National Resources, Infrastructure and Transport of Somalia's Upper House, put out the statement contending that President Mohamed Abdullahi Mohamed administration's move is a "breach of the laws of the country".

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