"The world's leading oil companies are increasingly accepting that
their quest for new reserves will take them into challenging new
territory," the Financial Times observed this week.
"In regions such as the arctic, the problems are technical. Around
the Horn of Africa, companies must calculate whether political and
security risks will put too heavy a burden on their production costs.
"This is hazardous territory in which to operate."
In 2011-12, U.S.-backed African forces drove al-Shabaab, the main
Islamist force, out of Mogadishu and seized its main urban strongholds,
including the port of Kismayo 200 miles to the south.
But large swathes of rural Somalia remain in the militants' hands and
they're waging a guerrilla war of suicide bombings and hit-and-run
President Hassan Sheik Mohamud of the foreign aid-dependent
Transitional National Government, who was elected seven months ago,
narrowly escaped being killed in a suicide bombing in Mogadishu a few
Major oil strikes would potentially transform Somalia's ramshackle
economy but there are fears the vast revenues it would produce could
bring about new conflicts, possibly re-energizing al-Shabaab, whose
transnational wing has strong links to al-Qaida.
Indeed, with oil exploration also under way in neighboring Ethiopia
and Eritrea, staunch enemies who fought a bloody border war in May
1998-June 2000, the region may well become part of the East African oil
and natural gas boom that runs down the Indian Ocean coast to
But the political landscape in historical Somalia, which includes the
semi-autonomous region of Puntland and the self-declared states of
Galmudug in the north and Somaliland on the border with Djibouti, is
complicated, messy and militia-ridden.
It's difficult even to determine exactly what territory Mogadishu controls.
"Attempts to carve up oil blocks before the Mogadishu government even
controls the whole national territory are undermining efforts to bring
peace and stability to a state that has been shattered by 22 years of
war and that exports terrorism," the Financial Times observed.
"The race to lay claim to resources risks triggering wider conflicts:
regional authorities have been hostile to central government since the
military dictatorship of Siad Barre.
"When he was deposed in 1991, warlords carved up the country -- and
several clan-based militias still hold sway, sometimes cutting deals
"The danger is that the race for oil will feed a destabilizing
rivalry between Mogadishu and other regions -- some still influenced by
former warlords -- just as the international community is celebrating
It's a fragile progress at best. Al-Shabaab remains a deadly threat,
even within the war-battered capital on the Indian Ocean, and Western
intelligence services caution against writing it off as a spent force.
Much will depend on whether Mohamud can get a fully functioning
government operating. Somalia's been without one since Siad Barre was
There is oil in commercial quantities out there. It was found by
Western oil companies during the Siad Barre era. But the hunt was
abandoned after his ouster, which plunged
the territory, ruled by Britain and Italy until 1960, into incessant
clan warfare that eventually morphed into the Islamist insurgency that
continues to this day.
The quest for oil now under way includes Eni of Italy and Royal Dutch
Shell with BP and Conoco of the United States expected to join the
Eni, Shell and Conoco were among the Western majors that conducted
exploratory drilling during the Siad Barre era. They want to reclaim
their old concessions and seek new production-sharing contracts.
The Canadian wildcatter Africa Oil began exploration in Puntland in
the arid northeast in January 2012, drilling Somalia's first wells in 21
Issa Farah, head of Puntland's Petroleum and Minerals Agency, said at
the time estimated there were reserves of 3 billion-4 billion barrels
of oil in that sector.
Estimates of Somalia's oil reserves, onshore and offshore, run as high as 110 billion barrels.
There are jurisdictional problems already offshore, where Norway's Statoil is prospecting off the Jubaland region.
Neighboring Kenya, whose forces played a key role in fighting al-Shabaab and currently hold Jubaland, claims the offshore zone.