Fuel for Change

　　Oil and gas resources are not the first images that come to mind when one thinks of the waters alongSomalia’s coastline. More notoriously known for maraudingpirates， the Indian Ocean around the Horn of Africaand its potentially vast fossil fuel deposits may be thesavior of this embattled nation. The Somali Governmentis now focusing on attracting foreign investors， includingChina， to help facilitate its economic revival.

　　Mohamed Abdi Gaandi， Somalia’s Minister for Energyand Mining， said that the country’s security situation hasimproved and the country is now open for business. Headded that China is helping Somalia with alternative waysto build much needed infrastructure.

　　Fueling success

　　Abdulkadir Abiikar， a Somali engineer based in the UK，told ChinAfrica that Somalia recognizes its need for amodern economy and sees oil and gas discovery andproduction as a revenue lifeline. The potential revenue isneeded to improve social programs such as education，sanitation， health and infrastructure.

　　With recent oil and gas discoveries in Kenya， Tanzaniaand Mozambique， all nations sharing the Indian Oceanshoreline with Somalia， the Somali Government is keen toplunge into hydro-carbon resource exploration. The historyof pirate attacks on key shipping routes near Somaliamay require increased security for offshore exploration.

　　Somalia has seen such investors as BG Group of theUK， Shell and the Italian oil and gas company Eni rushto its southern neighbors for exploration. BG Group enteredKenya in 2011， acquiring an interest in two offshoreexploration blocks： L10A and L10B to the south of theLamu Embayment.

　　In Mozambique， U.S.-based Anadarko Petroleum andEni both recently announced significant gas discoveries inthe Ruvuma Delta.

　　Tanzania’s Petroleum Development Corp. also announceddiscovery of offshore gas along theRuvuma Delta， soon after Mozambique. Thiswas closely followed by another announcementby Statoil， a Norwegian multinationaloil and gas company， that it had made athird offshore gas discovery near Tanzania.However， the Somali Government is awarethat the bulk of the Indian Ocean marinelinelies within its borders. Gaandi said thatwhatever discoveries are made by any of itsneighbors along the Indian Ocean only raisesSomalia’s hopes for greater things.

　　Attracting investors

　　Abdillahi Mohamud， a lead borehole engineer for Weatherford，a Canadian oil and gas company， and director ofthe East African Energy Forum， estimates future possibleoil reserves in Somalia in the 110 billion barrels range. Butwhile geologists appraise Somalia’s reserves， onshore andoffshore， the government has started looking into lawsthat would guide and govern exploration and development.

　　The 2008 Somali Petroleum Law， developed by theprevious Transitional Federal Government， is viewed bysome as too lax and open to different interpretations byoil firms and regional governments.

　　Mohammed Diire， an economist based in Nairobi，Kenya， said that if Somalia capitalizes on its geographicalposition close to the well-established oil industry of theMiddle East， investors may find it more attractive to drillfor oil in Somalia rather than in neighboring countries.

　　In August 2013， the government appearedto have scored big when UK-based Soma Oiland Gas signed a seismic survey and petroleumdata gathering deal.

　　Reporting on his company’s website， BobSheppard， CEO of Soma Oil and Gas， said hiscompany will concentrate on Somalia’s watersof the Indian Ocean， in addition to exploring12 blocks in the interior. Sheppard alsosaid that Soma Oil and Gas will develop a datacenter for the government that will store allobtainable evidence of oil and gas potential inthe country.

　　This， said Sheppard， will help the companyget the right to suggest and acquire exploration and drillingrights under production sharing agreements in anyprospective areas in the country.

　　This will give the firm some advantage to secure attractivehigh-prospective acreage up to 60，000 square km，which equates to a dozen 5，000 square km blocks as perthe 2008 Petroleum Law.

　　Prior to 1991， Somalia granted many international oilfirms E&P (exploration and production) licenses. Therewere 12 international oil companies with licenses in Somaliaincluding Chevron， ENI， Conoco Phillips and Shell. Butthe firms are yet to recommence operations.

　　To make things easier for attracting investors， Gaandiassured those eyeing its oil and gas potential that the governmentwill honor all licenses and rights acquired beforethe collapse of the Siad Barre government in 1991. Butthis， he adds， will depend on the production and sharingagreements.

　　However， the spanner in the works， according toregional economic analysts like Saad Abdi Shill， is thedifferent licenses being issued by the many splinter stateslike the Puntland and the Republic of Somaliland.

　　Gaandi said his government， which considers itself asthe custodian of interests of all Somalis that are spreadacross Kenya， Ethiopia， Djibouti， Somaliland， Puntlandand other regions， will have to approve licenses issued byother federated states.

　　China welcome

　　Interest in what Somalia has to offer to Chinese investorsis on the rise. After returning from a visit to China inAugust last year， Fawzia Yusuf， Somalia’s Deputy ForeignMinister， said all indications show growing and strengthenedbilateral ties between the two nations.

　　Somalia’s State Minister for Foreign Affairs， MohamedNur Gaal， told Xinhua News Agency after the same visitthat the Somali Government invites the Chinese companiesto invest in the country.

　　“Now that the country is stabilizing， the developmentneeds particularly in institution building and in infrastructureand social services gain great prominence and theseare the areas where China can play a greater role，” saidGaal.

　　“We also welcome investments from China as we makethe regulatory preparation to pave the way for foreigninvestment in Somalia，” he added.

　　The state-owned China National Offshore Oil Corp. hadpreviously signed a pact in 2007 with the regional governmentin Puntland for oil and gas exploration， particularly inthe Mudug region.

　　Hussein Dadoo， a Nairobi-based Somali economist，said China-Somalia relations began on December 14，1960， and the two nations signed their first trade agreementin June 1963. Early drilling activities in the countrythat began in 1945 by Sinclair Oil Corp. was followed bymany explorers in the 1980s， including risk takers fromChina. However， all these activities were put on holdfollowing the outbreak of civil war in the late 1980s， saidDadoo.

　　Dadoo said that although most Chinese nationals leftthe country when hostilities escalated in 1991， the twocountries still maintained some level of trading connection.Former Chinese Ambassador to Kenya， LiuGuangyuan said in September last year that Chinacommitted to rebuilding three main facilities in Somaliaincluding a mother and child health hospital， MogadishuStadium， the National Theater as well as the road betweenGalkayo and Burao in the north of Somalia.