- Somaliland hopes that exploration by international oil companies will unearth reserves similar to those in nearby Yemen, and is in talks to increase the number of companies taking on acreage in the quasi-autonomous region.
The region, which considers itself independent from Somalia but is not recognised by the international community, last week signed its second deal with an established international player - Norway's DNO International, a company that merged with the UAE's RAK Petroleum.
DNO's move was preceded by Genel Energy, which signed a production-sharing agreement for two blocks in Somaliland last August. Both companies are already producing oil in the Kurdish region of Iraq, another autonomous region.
DNO plans to begin exploration of its block in Somaliland next year. Like Genel, it has suffered from delayed payments from the Kurdish Regional Government (KRG), the result of a dispute between Baghdad and Erbil. Iraq's government considers the oil contracts between the KRG and international oil companies illegal.
Genel will start seismic surveys of its blocks soon, and aims to start drilling for oil next year, said Hussein Abdi Dualeh, Somaliland's minister of mining, energy, and water resources.
This is the first significant step towards establishing the region's oil and gas reserves.
"We have similar geology to Yemen, and Yemen has so far proven about 9 billion barrels of oil, and it hasn't looked at all its prospects. We are very hopeful that we have a similar potential," said Mr Dualeh.
While no other deals are imminent, Somaliland is working to add to the companies committed to the search for oil in the region.
"We are actively engaged with other companies as well," said Mr Dualeh. He said his government has had preliminary talks with Abu Dhabi's Mubadala Petroleum, and even signed a memorandum of understanding with International Petroleum Investment Company, another Abu Dhabi investor. No estimates for oil and gas reserves exist, but Somaliland is proximate to countries that are producing or are gearing up to do so.
Nearby South Sudan is a significant exporter of oil, and recent discoveries are about to kick off a gas boom in Tanzania and Mozambique. On the other side of the Gulf of Aden, Yemen, Oman and Saudi Arabia all produce hydrocarbons.
Mr Dualeh is unconcerned that tensions with Mogadishu, which does not recognise his government, will deter oil companies from coming to Somaliland.
Despite the endemic piracy that plagues the maritime trade routes running through the Gulf of Aden, the minister believes that the region is ideally placed for oil and gas exports.
"If we take this crude to the market, we have the biggest markets in the world facing us," said Mr Dualeh.
Source: The National
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