June 10 (Bloomberg) -- Two semi-autonomous areas of northern Somalia have largely avoided the violence that’s plagued the rest of the country for decades. Now oil exploration may change that, according to the United Nations.
Territorial disputes between the governments of Somaliland and Puntland, a separatist campaign by a clan-based group and “discrepancies” in oil licensing throughout Somalia are all contributing to simmering tensions in the region, the UN Monitoring Group on Somalia and Eritrea said in a May 28 memorandum. Somaliland’s planned deployment of an oil-protection force in the region may also deepen the strains, it said.
“Urgent attention must be given to this issue to avoid commercial activity triggering conflict further down the road,” said Jarat Chopra, the coordinator of the monitoring group. The document was sent to Bloomberg by a UN official who asked not to be identified because it hasn’t been released publicly.
Somaliland and Puntland dispute a border criss-crossed by oil concessions that have been awarded to companies including DNO International ASA of Norway, Vancouver-based Horn Petroleum Corp. and RAK Gas LLC of the United Arab Emirates. Oil deposits in Somalia may amount to as much as 110 billion barrels, according to a report published last week by the Mogadishu-based Heritage Institute for Policy Studies. Saudi Arabia, the world’s biggest oil exporter, has 266 billion barrels of proven reserves, BP Plc data shows.
Somaliland declared independence in 1991 following a coup in the Somali capital, Mogadishu, and drew boundaries along the lines of pre-colonial borders of the British and Italian occupied territories. Puntland, which declared itself an autonomous state in 1998, claims parts of Somaliland in the Sanaag and Sool regions. Khatumo, a clan-based political organization, says it has sovereignty over land that straddles the boundary, according to the UN monitoring group.
The prospect of further oil discoveries has sparked a “resource race” in which different political actors are carving up oil blocks to enhance their bargaining power against rivals, the Heritage Institute said. “The oil factor is likely to hamper rather than help Somalia’s endeavor to rebuild a stable state,” it said.
Chopra cites March clashes in Sanaag province following a visit by Somaliland’s President Ahmed Mohamed Silanyo and the deployment of forces in Sool by Somaliland and Puntland as examples of worsening relations.
“While there has not been major conflict to report, political and military tensions have nonetheless escalated in recent weeks,” he said.
Somaliland Energy Minister Hussein Abdi Dualeh didn’t immediately respond to e-mailed questions. In a comment on his Twitter account on June 7, Somaliland’s president urged the UN monitoring group to “stop meddling in the affairs of Somaliland.” The semi-autonomous region will “protect its economic assets,” he said.
Since presidential elections in January, Puntland President Abdiwelli Mohamed Ali Gaas has been lobbying Khatumo representatives and other clans to drop their independence movement in support of Puntland, aggravating tensions with Somaliland, the UN said. Khatumo has challenged the legitimacy of DNO’s license with Somaliland in the disputed Nugaal block.
DNO entered Somaliland in April 2013 with a block in the Nugaal valley and have a competing claim with Horn Petroleum, which was issued a license in the disputed area by Puntland’s government.
Horn Petroleum is working to resolve disputes over the Nugaal block with the Puntland, Somaliland and Somali governments, along with London-based Genel Energy Plc, DNO and others organizations like the UN, Alex Budden, vice president of external relations for Africa Oil Corp., Horn’s parent company, said in a phone interview.
DNO’s press officer Henrik Schwabe didn’t respond to four phone calls and three e-mailed requests for comment.
The UN is also concerned about the Somaliland government’s plan to hire a private security contractor to train and equip a special force to protect oil exploration workers at a cost of as much as $25 million.
“The deployment of the oil-protection unit could play into internal and regional conflicts that appear to be brewing within Somaliland and between Somaliland and other regional authorities,” Chopra said.
Deeq Yusuf, chief of staff in the Puntland presidency, said his government sees the oil-protection unit as “part of the continued aggression and clan expansion of Somaliland against the territory and people of Puntland.”
Assaye Risk, a U.K.-based risk-management company, was commissioned by Somaliland’s government to design a blueprint for the oil-protection unit. The 420-member force would provide security services to international oil companies, allowing the country to pursue one seismic operation, said Arabella Wickham, a director at the company.
“Within the blueprint, Assaye Risk clearly defined the operational remit of the OPU as defensive and pre-emptive only with a mandate confined to protective services in support of the energy industry,” Wickham said. The “government owned and commercially operated” unit would be recognized by the UN and constituted by Somaliland law, she said.
Puntland already has a similar force known as the Explorations Security Unit that provides protection for Africa Oil workers, according to the Heritage Institute.
Genel, which is exploring blocks in Somaliland, suspended seismic operations in September because of what it said was a “deteriorating security situation.” The company welcomes Somaliland’s plan to boost security, spokesman Andrew Benbow said in an e-mailed response to questions.
“Discussions continue with the government in order to facilitate a resumption of activity,” he said.
Somalia is also conducting offshore surveys and plans to hold a licensing tender next year once they are completed, Abdullahi Haider, a federal government adviser, said in March.
(An earlier version of this story was corrected to show that Somaliland’s government has yet to hire a private security contractor to train and equip an oil-protection unit.)
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