Oil in Somaliland

The black stuff can be very useful 

The ramshackle capital of Somaliland, Hargeisa, in northern Somalia has a bustling market for camels and is a frequent destination for aid workers. International businessmen are relatively rare. Yet untapped oil reserves have lured a number of foreign companies to the city, chief among them the Turkey’s Genel Energy under the leadership of ex-BP CEO Tony Hayward.

Genel’s involvement coincides with increased Turkish interest in the region. In February, Istanbul played host to talks between the Somali breakaway province and the internationally recognized government in Mogadishu. Turkey has offered to provide support for future regular talks between them.

Turkish attention is a coup for Somaliland. The region touts itself as democratic and has keenly participated in Western anti-piracy efforts. But it has failed to win much support for an independence bid. That has made delving into the politics of oil more attractive, with the elite hoping to gain financial stature and friends.

Jamal Hassan, the presidential candidate for the opposition Justice and Welfare Party and former CEO of Citibank in Tanzania, says that the nation is banking on oil as a cornerstone for development. At least a dozen blocks are apparently available for exploration. Given that Somaliland’s 2013 budget, according to its ministry of finance, was just $125m, any deal would flush the region with unprecedented resources.

There’s one hitch though: Somaliland’s control of oil blocks in the Nugaal valley is disputed by neighbouring Puntland, the Mogadishu government and a domestic breakaway movement within Somaliland. Puntland’s claim to the sites has led to the double sale of exploration rights. DNO and African Oil have competing contracts for the same block in Sool. Conoco and Eni are waving contracts issued by the long defunct regime of former dictator Siad Barre.

The Nugaal’s residents, members of the Dulbahante sub-clan, claim they were strong-armed into joining Somaliland by the dominant Isaaq clan. They dispute all parties’ right to the oil. Osman Hasan, a member of an occasional Nugaal breakaway movement, sees oil as a bargaining chip to attain autonomy from the Mogadishu government as the federal state of Khaatumo. A popular sentiment in the Nugaal that prosperity in Hargeisa is passing them by has mobilized locals against drilling. Abdi Rizaq of Las Anod University in the Nugaal says, “If your house is on fire and someone wants to go in and take things from it, what do you say to him? You say go to hell.”

Source: The Economist