Somalia’s untapped Oil and new petroleum bill creating further divisions

MOGADISHU, Somalia - The President of Somalia, Mohamed Abdullahi Farmajo on Saturday signed into law the controversial petroleum bill, paving the way to oil and gas exploration in Somalia if the Federal Government and the Federal Member States finalize the legal and political differences.

For months now, the law had caused divisions in Somalia, with regional states protesting the petroleum law which they deem controversial.

Last year, both the Lower House and the Senate endorsed the bill, although section legislators, such as the Puntland Senators, walked out in protest during debates.

Jubaland and Puntland have strongly opposed the petroleum law which they termed “unconstitutional”, "draconian" and "unreasonable" after a tussle in both houses.

Last Friday, Puntland president Said Abdullahi Deni has called all Puntland State representatives of both House in the Federal Government of Somalia for an urgent consultative meeting in Garowe next month, accusing FGS leaders of violating the country's Federal system and the provisional constitution.

The Federal States say they have not been consulted on the new contentious petroleum law, adding that no deal has yet been reached on the share of the natural resources in Somalia.

Farmajo hails stakeholders

But Farmajo, who has been at the helm for three years, assented the bill into law, increasing the controversy surrounding the sharing of resources with the federal member states.

Nevertheless, the Somalia president hailed the two speakers of federal houses, lawmakers, and experts for their contributions, local media reported.

Petroleum law, Farmajo argued, will be a regulatory framework that will enhance investment and exploration within and outside Somalia.
The legislation will allow the creation of institutions to oversee the oil and gas exploration operations and the revenue sharing between the federal government and federal member states.

It will be the first time in three decades that Somalia will be conducting offshore oil and gas operations.

Why the law is important for Somalia

Mohamed Ahmed, the Petroleum and Natural Resources Minister, had backed the law, arguing that it will help create more jobs for youths. But he did not give more details on how the oil and gas explorations will help the youth or the local contents of any future contracts.

The law, he added, will help the country improve infrastructural development besides generating foreign income to the fractured economy of Somalia. However, he did not explain how it is going to help the economy or the infrastructure of the country.

"We shall have many of our youths absorbed into the job industries. Our infrastructure will be fixed courtesy of the minerals," he said during a trip to South Africa.

The Horn of Africa nation wants to embark on a path to transform its petroleum exploration sector in order to attract the attention of new investors.

Disputed maritime border not affected

But the petroleum exploration will not affect the Kenya-Somalia maritime border, which is now subject to International Court of Justice arbitration, Ahmed said.

The two countries are embroiled in the bitter boundary dispute, which had at some point triggered diplomatic fallout in 2019.

Ahmed said: "We respect the rule of law and we shall wait until the disputed areas are solved before exploring oil deposits."

Kenya has been pushing for out of court settlement, which Somalia had outrightly rejected arguing that "we are comfortable with ICJ as an arbiter".

The Federal States uncomfortable

Despite the signing of the bill, a fallout between Mogadishu and federal member states is looming, something which could derail the potential petroleum exploration in Somalia.

Said Deni, the Puntland President, recently dismissed the bill, arguing that "we were not consulted in compliance with the Constitution."

The law will allow the central government of Somalia to coordinate any future oil and gas contracts and oil and gas exploration without the input of the federal member states, he added.

Mohamed Abdikadir, the deputy minister in charge of petroleum said: "The enactment of this law is a critical step forward for the Somali petroleum sector".

The country is currently on an international road show to showcase the exploration opportunities available in its hydrocarbons sector.

GAROWE ONLINE