Business
Have the likes of Ophir Energy got Somaliland over a barrel?
November 27, 2011 · 39 Comments
Anyone taking even so much of a scintilla of interest into commercial activity across Africa will recognize there has been a sea change in attitude towards business of late. China to its credit has proved that for all the challenges that exist, purposeful relationships can be formed and a sound case made for investment for the medium to long term. India has followed suit and now other nations are reassessing their approach and playing catch up. Of all the regions in Africa, until relatively recently the Horn of Africa was largely overlooked, risks were deemed too high and reliable data far too sketchy. All the signs are that 2012 will see a wealth of interest in the region and it looks likely that Somaliland will feature in a number of the discussions. No one disputes the fact that the country desperately needs foreign investment to develop infrastructure, broaden the base of the economy and provide employment. Such investment is welcome providing it is targeted, for the medium or long term, and mutually beneficial to the investors and the country as a whole. With Somaliland viewed by many as a de facto rather than de jura state commercial negotiations are all the more complex; there is potential high risk for both parties to any such discussions, but in the cold light of day it is Somaliland that is most vulnerable and companies and some unscrupulous individuals know this only too well. Matters have been made all the more problematic by the seeming paralysis at the heart of government. With Somaliland’s President both aged and dogged by ill health his years of distinguished service are being clouded by the activities of some of those closest to him who either choose to keep him in the dark about what is going on or seem more interested in carving out their own empires. So-called advisors prefer to pretend that all is well whilst jockeying for position and favour. Speculation and rumours are rife and in these troubled times the people are naturally anxious for news, and expect and deserve the truth. The President’s health is a matter of public concern, as Somaliland requires firm and decisive leadership if it is avoid a return to factionalism and escape the machinations of those who wish the state ill.
If Somaliland is to be able to move forward with confidence it must be in a position to make the most of its assets, namely its people, along with the resources of the land and sea. It is an absolute disgrace that currently the country is being denuded of precious trees to make charcoal so that the people in Saudi Arabia and the Gulf States can indulge their passion for smoking shisha. Equally scandalous is the fact that the coastal waters and Somaliland’s rich fish stocks are being allowed to be plundered with near impunity. As for oil and gas well here are two assets that excite considerable international interest, especially as Somaliland and its southern neighbour are believed to possess an estimated four billion barrels of oil. Any revenue generated from such assets needs to be put into a development fund which will help pay for infrastructure development and the establishment of projects for reviewable energy such as solar power. Sadly, it would appear that there is a real danger that it will be others who benefit from Somaliland’s oil and gas. A case in point is that of Block M10A and 35 “Berbera Block” in Guban Basin (an area of 16,270km2), the licence in this particular case states that London registered Ophir Energy as the Operator has a 75% interest, Ras Al Khaimah Gas Company (RAKgas) (JV Party) 22.5% and the Government of Somaliland 2.5%. Many would ask a quite legitimate question: Is this deal really the best Somaliland can get? Such possible deals remind us just how important it is that Somaliland has professional negotiators to protect its interest, people who are prepared to drive a hard bargain and if necessary walk away from the negotiating table. The Government of Somaliland must also be wary of becoming beholden to prominent Somalilanders in London and elsewhere who have set themselves up as so-called honest brokers and deal makers yet who appear more interested in acquiring a stake in precious assets on the cheap. After years of difficulties Somaliland deserves those in power to act responsibly, as trustees of the nation’s assets, to manage them with wisdom and transparency, with a stewardship that looks to the future and not just making a quick buck.
Mark T Jones
For more on Ophir Energy Plc visit: http://www.ophirenergy.com/assets/somaliland#licence
Follow @somalilandpressTags: Guban Basin, Horn of Africa, oil and gas, Ophir Energy Plc
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http://www.thepetitionsite.com/1/stop-ophir-energ…
2.5%?!?!?!? what? SHOCKING!!! ABSOLUTE MUPPETS! At the end of the day Ophir are out there to make money! If I were them, I would take advantage of muppets!! DISGRACE: day light robbery! Who does the negotiating? We shouldn't settle for less than 51%. We should have a controlling stake. This is called looting and cherry-picking. This is not in the interest if Somaliland and it's people. I feel so angry about this and I hope this agreement falls through. I very much doubt this is the only agreement.
http://www.thepetitionsite.com/1/stop-ophir-energ…
2.5%?!?!?!? what? SHOCKING!! ABSOLUTE MUPPETS! At the end of the day Ophir are out there to make money! If I were them, I would take advantage of muppets. DISGRACE: day light robbery! Who does the negotiating? We shouldn't settle for less than 51%. We should have a controlling stake. This is called looting and cherry-picking! This is does not benfit Somaliland and it's people in anyway shape or form. I'm so angry about this. I hope this agreement falls through. I very much doubt this is the only agreement. The individuals involved, supposedly representing Somaliland, should RESIGN immediately.
are you kidding me a Petition ? to Somaliland ? what do they know about petition ? Silanyo has made his own clan the ruling elite of Somaliland and you are running around with a Petition !!!
We most probably invest our time/energy elsewhere but it won't hurt, we can't sit and allow this to take place? I felt so angry to have come across the content of this article. I'm sure something can be done, although we have less than 2 weeks.
Somaliland 2005
November 9, 2005 (Business Africa) – A production-sharing agreement covering four oil concessions in Somaliland has recently been finalized by South African company Ophir, according to a report published in Africa Energy Intelligence.
Ophir was established in 2004 by the former management of Fusion Oil & Gas. Ophir has acquired 75% of the onshore 35 and 36 licenses and 75% of the offshore M10 and M10A blocks, the remaining 25% of each being owned by a British company, Rova Energy.
The rights were acquired by Ophir when it purchased 75% of Rova. However, in 2004 a Canadian firm, Soma Petroleum, made similar claims about the same blocks, only for the government to deny it had any dealings with the company. The fact that Ophir holds interests in various oil and gas projects around Africa does indicate that some progress may be made in exploring Somaliland's oil potential, but the problem of international recognition and the question of just who owns the resources in Somaliland—Hargeisa or Mogadishu—will not be solved anytime soon.
Ophir Energy and Dahir Rayaale
In April 2003, Rova Energy Corporation Limited (Rova) entered into the Berbera Production Sharing Agreement (Berbera PSA) with the Government of Somaliland. Rova was a special purpose company established to acquire and develop the Berbera PSA. In return for providing early funding, Mvelaphanda was awarded an option to acquire 75% of the issued share capital of Rova. The remaining 25% was held by a private individual. Ophir acquired this option from Mvelaphanda in October 2004 and in March 2005 exercised its option to acquire 75% of Rova. In February 2007, Ophir and the private individual agreed to exchange Ophir’s shareholding in Rova for a direct interest in the Berbera PSA. This was subsequently ratified by the Government in March 2007 (with the transaction completing in May 2007). Ophir then became a direct participant in the Berbera PSA holding an interest of 75% and is the designated operator.
In 2008 Rova agreed to sell its 25% interest in the Berbera PSA to UAE based Ras Al Khaimah Gas Company (RAKgas). Ophir and RAKgas currently participate in the Berbera PSA through a joint venture governed by a Joint Operating Agreement (JOA).
The Berbera PSA originally consisted of four sub-blocks that were designated as 35/36 (onshore) and M10/M10A (offshore). In 2006, the Group elected to maintain the 35 (onshore) and M10A (offshore) sub-blocks and relinquish 36 and M10.
Only three wells have been drilled in the original Berbera Block, two of which were located offshore in block M10, where they encountered minor oil shows. The third well, the only onshore well in the block, was a 243m deep stratigraphic well. Three wells, drilled adjacent to the western edge of block 35 (Dagah Shabel 1-2-3) over the period from November 1958 to November 1959, all encountered good oil shows. The M10A/35 PSA, located in northern Somaliland, is predominantly onshore but also extends offshore into the Gulf of Aden. The block encompasses an area of 16,270km2 with a water depth of approximately 0 to 1,000m
This is an absolute disgrace if true. No ands ifs or buts.
Concerneed Somalilander
@hales 500.
Thank you million times for clarifying the Ophir energy plc and Dahir Rayaale.
I second concerned Somalilander…this is an absolute disgrace.
But the problem of international recognition and the question of who owns the resources in
Somaliland—Hargeisa or Mogadiscio—will not be solved anytime soon. gee what stupidity.
I knew all along something was fishy about this dramatic episode!. What is the Silaanyo Govt.
doing about this absolute disgrace. This Ophir Energy PLC must be abrogated by the Silaanyo Govt.
and substituted by the SDC Company joint venture London based HQ. Concerned Somalilanders need fast
Silaanyo Govt. answers.
Cheers.
I thought this deal was common knowledge, I have known of this agreement for about two years now. This results from the previous government.
I do believe that the current government will take action
How do you expect the current Government will take action. Which way..Cancel the deal or just go with it?
Please elaborate farther.
Cheers.
The Minister has a long experience in this field. so I think he knows what he's doing.
its all a paper stuff ,i don't see a real investment ,small paper company's from Africa will NOT do much
If this deal goes through, and that foreign company can pump oil and somaliland turns into a new "Nigeria" and we basically get robbed of resources then a lot of my arguments of Sland being a lot better and there is no hope for going back to Somalia bcz of corruption etc will get a dent. Then you will really wonder if we really are much better with dealing with corruption and shady deals. Altough Sland is better in most ways (living standers, security and stuff not potential and resources then Somalia is better). We are living in an era of growing regional super powers in EAC Sland must be second to none in EAC. And also help Somalia build its democracy. We all want a stable and prosperous Somalia. Today you are respected based on economic and military strenght NOT democratical institutions. I hope that this deal fails anything below 40% state owner ship is economical rape.
@sry
I hope that this deal fails anything below 49/51 deals either way is economical rape. I also hope that
this affair becomes limited to Somaliland of Hargeisa without the Somalia of Mogadiscio. Do you agree?
Tell me my friend, how do you see the newly established SDC Company London based? all of the bloggers
are avoding to talk about this Company and the recent trip of President Silaanyo and his team of Ministers
who had meetings with the UK experts on this subject matter!?. Also, I would like to know if the Ophir
Energy PLC has any relationship with the SDC CO.? I need fair and honest answers to satisfy my curosity.
help me out here Sry.
Cheers.
2.5% is of course more than enough to pay for their daily supply of drugs from Ethiopia. What a disgrace!! 2.5% will not cover even the clean up of the inevitable industrial waste which would pollute Somaliland's soil and water.
You sure damn right. Btw what was that story of yours the other day concerning the Fabric cable and the
baaang cutting Faroole's fingers with one stuck up inside. What was that episode all about?
Cheers.
The fibre optic underwater cable terminal was suppose to land at Berbera some time ago to connect Somalilanders to the information super highways and give them broadband speeds, improve our education, initiate an IT revolution in Somaliland, and expand our economy. The cable along with all those promises is yet to be seen. And the bang? Well I was hoping the Brits had given Silaanyo one giant Nuke to chop off Faroole's all remaining fingers.
IMAGINE we get recognised, without any solid foundation, legal structure which benefit the economy, the people and the country, professionals who would be able to represent Somaliland in the right manner. I have been and still AGAINST recognition at this stage. We are throwing ourselves into to the Lion's den and everyone will take advantage and exploit our resources/country. "Shaydaankaa dagdaga". I truly believe we should take our time, and simply walk away from such offers.
Either way the Lions den is always there. What are you defending I dont see your point. EH?
Cheers.
Well there is a difference between inviting them, specially when most vulnerable, and when it is convenient for Somaliland, when they able to call the shots. at the moment we are settling for everything and anything. Desperado! Concurrently shouting from the rooftops and welcoming individuals and companies that are seeking for opportunities which are in their best interest ONLY.
C'mon buddy don't think that the govts. of Somaliland and Somalia are all that naive and stupidly
irresponsible…not to worry something good is in the oven.
Cheers.
This is seriously a disgrace if this happens for real. I thought we Somalilanders where smart enough to be. I hope that the governement will not let us down. Inshallah I hope that God/Allah will help us by clearing the minds of the negotiators of this deal and that they do the right thing for Somaliland.
I hope the governement will know who they are doing this to, to their brothers,sisters,cousins,families. We are one, Somaliland. Please think twice before doing things that important.
If this is an absolute reality than it is unacceptable. It is inflicting the deepest wounds on us as we are being exploited. I think this is not the hell CONGO. Only a Mafia network ruling a country can do this.
Look this is a PSA which means that the government will receive money under the following terms:
1. Share of oil under PSA which is not limited to 2.5% but is likely to be significantly higher. Once costs are recovered the typical psa sees the gov take around 50%
2. Taxes on production.
3. The gov share in the operating company.
The question is how fair is the PSA signed and more importantly the legal situation in the world today means that if you can prove that there is corruption involved in these deals, you can take both the government and the companies to court in the US and UK even if the bribe was paid in Somaliland. Just look at what is happening to the son of the president of equitorial guniea who is having his assets seized by the US and French Governments.
So if you can prove the deal is corrupt, take it to the court, otherwise stop spreading rumours. Times have changes since Mobutu was robbing the Congo and concerned citizens now have the power to ensure that their leaders are well behaved using foreign courts. Look up the UK anti bribery law and the US foreign corrupt practises act on the web to see what Iam talking about.
I happen to know that the author of this editorial actually spoke on the subject of the UK bribery act 2010 at an academic conference in Boston, USA in July of this year.
That is great. I don't know the guy but just wanted to point out that we have the power to make sure our government behaves well.
Well, it would be nice if someone provided some research or report on what to expect. This article started with Mark T Jones, who I am sure has a reputation to uphold.
Then there are numerous anonymous who are giving their opinion (expertise?) and implying that it's not so bad.
Please, someone stand up and give us better look at this, because as a people we're clearly in the dark.
Thanks in advance.
Marty,
Expertise or opinion? An interesting question that could be asked of many. As I'm not being paid to do so why woud you expect me to offer more factual evidence than the author of the article.Why don't you google PSA and have a look at what the typical terms for a PSA are and how this differs from the ownership of the operating company?
If you look at what i've written all I've said is that folks don't understand the nature of how countries make money from oil development. As the terms of the PSA are not public I cannot comment on how good or bad such a deal is all I can say is that it is unlikely our government has signed to get just 2.5% of the pie as is implied by the article.
A more important question to ask is what will ophir do with the concession. Typically concessions come with work obligations for the company to maintain their blocks. Since very little work has taken place in Sland since the civil war people should pressure the government to be transparent on what the PSA terms are and what the work obligations. This would allow people to ask the gov why people have not reliquished blocks they have done no work on…… More work has taken place in pland our unstable neighbour who have shot seismic and are looking to drill.
@Marty
Sure this Article started with Mark T Jones, who has a reputation to uphold. Being a Britisher, there's
no doubt he has the upper hand knowledge of everything. Personally I would welcome him to give us more
better looks at this. The British Energy Companies like the BP have profound experiences specially
what they did in the Arabian-Persian Peninsular (GCC) is ideally suitable to adopt in Somaliland. The SDC CO.
like Adnoc of Abudhabi UAE could be ideal for Somaliland. If the BP becomes the no1 contender,
for Somaliland to gain ready money to gain a good stakeholder pct..say 49 or even 51 shares, any
Royalty of oil revenues could be advanced to the Somaliland by Bp on loan basis with low interest rates.
of course the Somaliland Govt should be able to pay certain amount of cash from own pocket. This
arrangement could be supervised by a London based within the BP cycles. That way the oil exploration could take off asap. with every body taking away happily a fair share shot .
Cheers
@Marty from Cheers.
Moreover, one may argue why Royalty when Somaliland is not a kingdom country. However,
Maybe unprecedented in the Unkingdom World. Nevertheless, for the system to work, this system
could also be expanded to the unkingdom World. What happens to any Royalty oil money.
This Royalty after the loaned interest was deducted should go straight to the Presidency to deal
with as appropriate or to add to the a/c of the SDC CO. or the A/C of the Finance Minister whichever is
suitably commendable. Hope these arrangements make commonsense.
Cheers.
Calm down people. This was under Riyaale if you think Silaanyo who basically risked his own life for this nation so many years ago is going to let some south african firm just come in and take our natural resources without giving us equal payment for said natural resources then you are all idiots!
Forget about Silaanyo what do you think regular Somalilanders will do? Calm down and stop falling pray to fear mongering. See how this plays out if its to our advantage then great if its not we are going to kick them in the nuts and send them packing like Siyad Barre!
Somalilanders need to adapt a wait and see policy where ACTUALLY wait for the results of any proposed government project and then criticize. Furthermore, we must realize that Somailand's political status at or lack there of will cause the nation a significant disadvantage going into most foreign trade agreements. We sit here and argue about how disgraceful this deal is, but at the end of the day- how many major oil companies do we know of that are willing to expose themselves to legal risk should any arise from previous stakeholders.
Thirdly, do we even know what the cost structure or breakdown will look like. All we have been told is that these foreign companies will own the lion share of the ownership, but are they also incurring 75% of costs. If so, we really shouldn't complain unless the government of Somaliland is willing to put its money where its mouth is and I very much doubt it. If we had millions to spare then the drought in our region would have been nonexistent.
Fourthly, people have seem to have forgotten that we have 00000000 experience or expertise in handling oil drilling operations; which means training for the locals or outsourcing foreign laborers. Again, Somaliland doesn't bring anything to the bargaining table.
Finally, the government could always increase its ownership stake to 50% with time if it believes doing so will be in the best interest our the nation. Nothing is written in stone so we should all just….. WAIT & SEE
i AM VERY PLEASED TO SEE THE AUTHOR OF THIS PIECE RAISE THE ISSUE OF TREES BEING CUT DOWN TO MAKE CHARCOAL AS OUR NATURAL HABITAT IS SACRED TO THE COUNTRY.
What is most important is the profit sharing agreement entered into as that is where the oil money for Somaliland can come from.
The agreements in Puntland share oil profits between the oil companies and the Government if oil is found.
The oil companies put up very large sums of money to explore for and drill for oil and they risk that money if oil is not found.
Caqli "Somalilander"
LOL 2.5%
hoooold ur horses ppl…..all the FADHII KU DIIRIR..Do you have all the facts, or it's usual shoot first and question later. Any one who is bad mouthing the government without substantial evidence is just playing politics…
Please bros and sis,
This so-called oil exploration/concession deal with S/Land gov and Ophir energy plc is a legal fantasy contract and will hardly EVER come to fruition.
We need to understand this whole speculative belief of oil/gas 'reserve' in S/Land/Somalia. It was due to the World Bank/UN three intensive research on oil/gas prospect off our Gulf of Aden coast during the late 1980s.
The findings of this research of oil/gas off the Gulf of Aden had lead to a bidding war for oil/gas exploration blocks from the leading super-majors in the than 1980s oil industry.
As Barre was still the legal/internationally recognised president of the than Somali Republic, his administration granted a 99 year lease to prominently American oil giants Conoco, Amoco, Chevron and Phillip. Two-third of the oil/gas blocks were allocated to the US oil majors due to US gov annual $100 million financial/military aid and US military use of the strategic Berbera deep-sea Port.
However, as his regime collapsed and the northern-western region of Somalia was liberated by the SNM, all the super-majors had declared force majeure!
To this day and 20 years on, all these super-majors still clam legal and exclusive rights to explore for oil/gas in Somaliland –
Chevron (ranked America's third largest company with annual profit of over $20billion!!)
ConocoPhillips (America's Fortune 500 fourth largest company with profits of $11billion)
Amoco (which is now part of BP with profits of $3billion)
Agip (Italy's largest oil company controlling several oil fields in Africa)
If its true than the locals have no choice but to take arms against "Ophir" and their mafia drug high so called ministers in Hargeisa. Ophir should know that they cant rob Somalilanders and this "deal" is rather a joke. Who do they think we are?
They should be arrested at the Berbera airport when their so called survey team arrives. Somalilanders deserve 55% or go home. Our oil can stay where it is.
Ignore the first "Kayse" aka fake Kayse.