OilPrice.com
Sunday, May 26, 2013
Somalia plans to sign 30 PSCs this year with foreign oil companies
and auction off over 300 new oil blocks, but oil rights here are not
solidified and this will be another bloody mess. Analysis: Late
last year, Somalia announced it would auction off 308 oil blocks, newly
delineated. This has caused a bit of rush on Somalia, from the juniors
to the supermajors, like Royal Dutch Shell and ConocoPhillips.
This
pending rush on Somalia is premature. The country’s new government is
transitional and dysfunctional at best, and by no means does it control
the country—the militant al-Shabaab has been weakened, but certainly not
driven out and still controls some key areas. Somalia’s coast is also a
major piracy venue. It will be impossible to determine the power
brokers here to land contracts, especially for the juniors. A multitude
of influential tribes and militias are trying to gain control over oil
prospects and dealing with the new government is only a small part of
the equation. The power brokers are shifting and the dynamism is
impossible to keep up with. It is difficult for a government to
delineate new oil blocks on territory it does not fully control. The
arrival of foreign oil companies will speed up territorial conflict over
oil.
Somalia’s premature oil ambitions will also see it
butt heads with Kenya over disputed offshore blocks. Kenya has the upper
hand here, and it’s already licensed blocks in this…