(Refiles to clarify country is Somali)
By Kelly Gilblom
NAIROBI May 11 A dispute between two
semi-autonomous regions in Somalia is delaying exploration for
oil and gas over fears that local authorities are issuing
licences to explore blocks that overlap in each other's
territories, officials said.
East Africa has become a hot spot for oil and gas
exploration after new finds in waters off countries including
Uganda, Tanzania and Mozambique.
The boom has led to speculation about the potential for
finding oil offshore Somalia in the Horn of Africa, which so far
has no proven hydrocarbon reserves.
"Put it this way: Puntland and Somaliland have what's called
'disputed areas.' It's really created a quagmire," said Ali
Abdullahi, the chief executive officer of Amsas Consulting, a
Somali firm that advises private oil firms in the region.
Somaliland, which declared its independence from Somalia in
1991 but is still not recognised internationally, has been
relatively stable compared with other parts of the country,
which has lacked effective central government for two decades.
Although Puntland is also stable, it is notorious for piracy
and has frosty relations with Somaliland.
Both regions claim they control a disputed area known as
Sool, Cayn and Sanaag (SSC).
Within that zone lie nearly a dozen oil blocks, mostly
unlicensed, demarcated by Puntland and Somaliland authorities,
according to a map from data firm IHS.
Companies are unsure whether their contracts with the local
authorities to drill wells will remain valid.
The dispute between Somaliland and Puntland mirrors another
between Kenya and Somalia over their maritime border, which may
also deter oil exploring firms.
In March, Canadian firm Horn Petroleum, and its
exploration partners, including Vancouver-listed Africa Oil
Corp., started drilling in the Dharoor Block, located in
the northeast part of Puntland.
Oil consultant Abdullahi and other Somali oil analysts have
claimed, furthermore, that any find by Horn Petroleum in Dharoor
may be threatened by the fact that state-controlled Italian
explorer Eni may still have legal rights to the block.
Eni was issued a license by the Somali government in the
1980s to explore Dharoor.
Both Eni and Horn Petroleum declined to comment.
Additionally, another block licensed by Horn Petroleum and
its working partners in the western part of Puntland, known as
the Nugaal Block, overlaps a block licensed by Somaliland to
unlisted British explorer Asante Oil.
"We are aware that there are overlapping claims in the
Nugaal block but don't wish to comment publicly," said Keith
Hill, chairman of Horn Petroleum, in an email to Reuters.
"We believe this is a matter best resolved directly by the
Asante Oil could not be reached for comment.
For their part, Somaliland and Puntland each deny they have
encroached on the other's territory. They blame the other side
for licensing blocks in areas that don't belong to them.
"There were a lot of stories about overlapping licenses,
(but) it is clear that Somaliland doesn't make any claim beyond
the colonial borders that were demarcated," Hussein Du'ale, the
minister of mineral resource, energy and water, told Reuters.
In an interview in Somaliland's capital Hargeisa he said the
Nugaal Basin, where the Nugaal Block is located, is 80 percent
owned by Somaliland, and the licenses issued by Puntland
authorities to the same stretch of land are invalid.
"We recognize that there is license given by the
administration of Puntland, which claims that this is part of
their territory," Du'ale said
"If you look at the colonial border this goes deep into
Somaliland territory. We don't ... claim areas in Puntland, and
we hope that our brothers will reciprocate."
Issa Mohamud Farah, Puntland's petroleum director, who is in
charge of oil exploration, was unavailable to comment.
Without a central government, analysts said it is unclear
how and when the potential oil and gas reserves believed to be
in Somalia can be explored.
"The (Somali) federal government has been weak for a very
long time," said Abdullahi, the oil consultant.
"That leaves the question of who's right and who's wrong
here? It's so hard to know."
(Additional reporting by Husein Ali Noor in Hargeisa; Editing
by James Macharia and Jane Baird)