Somaliland is optimistic that a search for oil by Genel Energy Plc (GENL), run by former BP Plc Chief Executive Officer Tony Hayward, will find commercial quantities of crude, Mines and Energy Minister Hussein Abdi Dualeh said.
The company has completed about 95 percent of an airborne geophysical study and plans to conduct a two-dimensional survey of a 4,000-kilometer (2,485-mile) area in the semi-autonomous northern Somali region, Dualeh said in an interview yesterday in Ankara, the Turkish capital. Patrick D’Ancona, a spokesman for London-based Genel, declined to comment beyond its annual results statement issued on Feb. 28.
The “initial map shows big, promising basins,” Dualeh said, adding that Genel hasn’t interpreted all of the data yet. “That does not mean there is oil there. There is still a lot of work to do: 2-D seismic, exploratory drilling, a lot of processes. It looks promising.”
The hunt to develop energy resources in East Africa has gained pace since Anadarko Petroleum Corp. (APC) made the decade’s biggest natural gas discovery off the coast of Mozambique. Finds in Tanzania, Uganda, Kenya and Ethiopia have also raised the region’s energy profile. Demand in China and India helped spark a bidding war last year between Royal Dutch Shell Plc (RDSA) and Thailand’s PTT Exploration & Production Pcl (PTTEP) for Anadarko’s partner Cove Energy Plc.
Somaliland has licensed one-third of its oil fields where the Anglo-Turkish company Genel operates in five blocks, with plans to drill a first well by mid-2014, said Dualeh. Ophir Energy Plc (OPHR) of the U.K. is also in negotiations for a 2-D seismic contract and may start drilling in 2015, he said.
“It is a no brainer, there is oil” said Dualeh. “It is a matter of finding commercial qualities.”
Somalia, particularly its northern regions of Somaliland and Puntland are a “southward extension of the lucrative geologic framework of the Arabian Gulf” that includes Saudi Arabia, according to Osman Salad Hersi, an associate geology professor at the University of Regina in Canada. Saudi Arabia is the world’s biggest oil producer.
“The country, Somalia, including Somaliland, can potentially be the Saudi Arabia of East Africa,” Hersi said in an e-mailed response to questions. “But the instability of the country within the past 30 years or so hindered any meaningful hydrocarbon exploration.”
Somalia has been wracked by more than two decades of civil war since the fall of Mohamed Siad Barre’s dictatorship in 1991. Somaliland declared independence after Barre was removed from office and the former British protectorate has yet to gain recognition as a sovereign nation by any other country or foreign institution.
“Lack of international recognition for their unilateral secession and not being part of the internationally-recognized Federal Somalia of Mogadishu puts Somaliland in limbo,” said Hersi.
Somaliland is negotiating with other unidentified international oil companies hoping to sign exploration contracts in 2013. Cnooc Ltd. (883), the state-owned Chinese oil company, and Canadian and Australian companies are already forging oil deals with the Somali government and that of the semi-autonomous region of Puntland.
“We have not had any active exploration on such a scale until now,” said Dualeh. “Genel is really leading the charge in really putting together a very aggressive big exploration campaign to really evaluate the potential of Somaliland.”
Hayward resigned from BP, Europe’s second-biggest energy company, in October 2010 following the Gulf of Mexico disaster. He teamed up with financier Nathaniel Rothschild to create Vallares Plc, a shell company that raised 1.33 billion pounds ($1.98 billion) through an initial public offering in London in June 2011. Vallares agreed to merge with Genel in September 2011.
Shares in Genel fell less than 0.1 percent to 794.50 pence in London yesterday. The stock has gained 1.9 percent so far this year.
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