Somalia's Senate approves petroleum law amid Puntland rejection

MOGADISHU, Somalia - A Controversial Petroleum Law that allows extraction of oil and gas along Somalia's coastline was on Monday endorsed by the Upper House, Garowe Online reports.

Last year, the controversial bill was also backed by the Lower House, giving Federal Government almost veto power to control the entire process.

Ministry of Natural Resources, the bill states, shall coordinate mining and contractual obligations, a move that has irked internal wrangles involving states.

Since 1991, Somalia has not traded its oil and gas following instability orchestrated by civil wars and rising of extremist Islamic militias.

Puntland rejects the bill

But the bill could reignite tensions between the Federal Government and the states, who accuse Mogadishu of "blackmail and opaqueness".

During Monday's stormy session, Senator Mohamud Mashruc elected from Puntland said, he and his colleagues have walked out in protest due to lack of consensus.

Puntland, he argued, "will not accept this law as long as it excludes the Federal States from all agreements on the oil and gas licensing round".

Mashruc, who is the deputy chair of the Senate Committee on Natural Resources said the bill has been politicized and there are some changes made to its original points they have prepared to allow the FGS minister to ink any deal without the approval of Parliamentary Houses.

"In most parts of the world, oil agreements are being approved by the National and Regional Parliaments. Somalia is trying to overstep the law," he added.

He warned the risks that the bill could pose to the country's natural resources as it gives the FGS's minister of petroleum alone full authority to sign multi-billion deals with oil companies, even those with no clear background. 

The Senator has urged President Farmajo not to sign the bill into law and called for a review.

Farmajo on the receiving end

More regional states are set to reject the bill, a move that is likely to derail auctioning of oil deposits in a bid to revive Somalia's economy.

Mohamed Abdullahi Farmajo, Somalia's president, has been struggling to strike a good working relationship with regional states.

The bill is going to be the next point of contention, which would yet again test his fragile relationship with regional governments which he has previously accused of plotting to overthrow him.

Mohamud asked Farmajo "not to sign the bill into law before it revised and returned to its original method prepared by the Senate Committee on Natural Resources".

Should he be compelled to sign, Mohamud added, Farmajo should "find it necessary to quit as the president of the FGS".

Oil and gas to improve fortunes

The Ministry of Petroleum and Mineral Resources had said promised to announce in December when it plans to launch the bid process in 2020.

“We are presenting up to 15 blocks,” Minister of Petroleum and Mineral Resources Abdirashid Mohamed Ahmed told Reuters on the sidelines of an African oil and gas conference in Cape Town.

He added that international naval blockades had almost totally eradicated offshore piracy at the former hotspot for maritime hijackings.

“For the past decade or so there has not been one casualty of piracy, so offshore is safe to invest.”

The gas, he said, would help to restore the economy of the fragile nation through the creation of jobs to the impoverished youthful population.

Disputed fields with Kenya not affected

Also, Ahmed confirmed that the oil blocks that were set for auctioning had nothing to do with the disputed boundaries with Kenya.

Both Kenya and Somalia are battling over maritime boundary along the Indian Ocean, threatening possible diplomatic fallout between them.

International Court of Justice (ICJ) is set to start hearing the case from June this year after plans to have out of court settlement flopped.

Kenya had in March last year accused Somalia of auctioning the deposits to a Norwegian company without proper consultation.

Already, ExxonMobil and Shell hold offshore blocks in the country, although operations halted long back. The two companies made a comeback after 30 years.

The two major oil companies paid $1.7m to Somalia for leasing the blocks last October. The lease period is estimated to be 30 years, FGS said.

GAROWE ONLINE