Somaliland: Exploration in ‘Africa’s 55th State’

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Eng Hussein Spearheads National Oil InterestsOn a trip back to Abu Dhabi this month, Mr Duale was feted at a table of honour, knee to knee with Mohammed Al Hamli, the UAE Minister of Energy, and Tony Hayward, the former BP chief executive, in the heart of the luxurious Yas Viceroy hotel. Later, after delivering one of the keynote speeches of the morning to executives from the world’s supermajors, he enjoyed a cruise around the island before retiring to his suite.

By: April Yee

Somalilandsun: Until 2010, Hussein Abdi Dualeh worked as a simple project manager in Los Angeles overseeing the use of natural gas as fuel for cars. It was a natural progression given his downstream engineering experience and his career start in the UAE as a salesman out of high school, marketing lubricants for Abu Dhabi National Oil Company.

Piracy starting to fall out of fashion Hussein Abdi Dualeh, the oil minister of Somaliland, speaks with The National about pirates and UAE links.

Do you plan to establish a national oil company? It would be irresponsible of me if I don’t put the seeds of that now, because we don’t want to repeat the resource curse that some of these African countries have had: profits end up being misused and squandered and the countries in poverty and environmental damage. There is a hope that this new generation that are taking charge of the mining business in Africa really want to learn from those mistakes. We have three countries in Africa that are really doing a great job right now. Ghana is one of them. They have good legal regimes, good legislation, and they even established a sovereign wealth fund to make sure the wealth gets developed in a sustainable way and doesn’t get squandered.

Why haven’t you awarded more licences? We don’t want to just kind of do it wholesale. We want to see some of the results before we auction off everything else. We want to allocate and award acreage in a measured and calculated way, and we want to do due diligence to make sure that we have qualified and verifiable partners who have the wherewithal and capital, financial and technical, to make sure they’re in for the long haul.

How will you deal with pirates? There hasn’t been as much of an issue of piracy as there has been in the past. They’re smoking them out of hiding places, they’re prosecuting them, they’re hunting them down, and the world is waking up to this problem – because it ended up being a US$7 (Dh25.71) to $8bn problem. It got old for everybody and they said, enough is enough. You have some pirates in Somaliland, but they are behind bars doing some very long sentences. It’s not fashionable any more to be a pirate. It’s all about the economy. If there is hope in their horizon to develop and get opportunities, they will move away from this. Lawlessness in the Horn of Africa is getting less and less because of governments getting control, security beefed up.

How can you cooperate with the UAE? We feel the UAE is a really close partner with the people of Somaliland as well as Somalia because there is a long history between the two peoples. There are a lot of them from my country that have worked here in the Emirates or Qatar or Saudi Arabia, so there’s a very strong affinity between the two countries.

There is good support from the government of the Emirates in terms of helping us with some development programmes. It’s not political at this stage, but there’s a lot of sympathy for us, and I think this will lead to economic ties.

* April Yee

Those days are past. On a trip back to Abu Dhabi this month, Mr Dualeh was feted at a table of honour, knee to knee with Mohammed Al Hamli, the UAE Minister of Energy, and Tony Hayward, the former BP chief executive, in the heart of the luxurious Yas Viceroy hotel. Later, after delivering one of the keynote speeches of the morning to executives from the world’s supermajors, he enjoyed a cruise around the island before retiring to his suite.

Such is the life of the new oil minister of Somaliland.

His rapid rise to power is a product of politics and the reemergence of companies questing for oil and gas in a place that has yet to secure its statehood. Like Greenland and Iraqi Kurdistan, where wildcatters are drilling deep for oil, Somaliland administers itself by and large on its own, yet has not been recognised as a country by the United Nations. Like them, it also hopes hydrocarbons can ease its path to statehood.

“You know what really carries the day is not politics, it’s geology,” said Mr Dualeh. “If the geology is good, all bets are off.”

Somaliland has ample history to overcome. In the late 1980s, Chevron was drilling and Conoco laying airstrips thanks to oil concessions granted by the central Somalian government, which included the former Italian colony that today is known as Somalia and, to the north, the former British protectorate that calls itself Somaliland.

In 1991, militias overtook the capital of Mogadishu and deposed the government, sending Somalia into lawlessness and famine and leading foreign companies to declare force majeure. That year Somaliland declared independence.

“We actually think of ourselves as the 55th state in Africa,” said Mr Dualeh, pointing out that companies operating there are publicly traded in London and enjoy ample legal counsel. “If you have a company that has a lot of interests in Somaliland, for the safety of their interests they would rather see a full state that they’re dealing with – so it will only hasten the day that we’re being recognised.”

This time around, three independents have signed up to explore Somaliland, the best known of which is led by Mr Hayward – Genel Energy, the Turkish operator in Kurdistan. Genel is to start surveying next month and expects to drill its maiden well at the start of next year, part of a regional exploration programme that includes Morocco and the Ivory Coast.

“The challenge is given the very high quality assets in Kurdistan, how do you replicate it as you go outside?” said Mr Hayward. “Really the only way to do that is through exploration, so what we were looking for is frontier exploration opportunities where we thought there was a possibility of finding large fields.”

No one knows how much oil could be underground, in part because the exploration campaigns under the previous government were so brief. Mr Dualeh estimates that reserves could be in the billions of barrels, although he stops short of imagining a future with million-barrel-a-day output and ascendancy to Opec.

Beyond exploration, he hopes to transform the port of Berbera – a three-berth harbour that today exports sheep and frankincense – into an international fuel shipping hub, taking advantage of its deepwater geology and proximity to the Asian maritime transit route. A road and railway are also planned between Somaliland and Ethiopia, with a pipeline for Ethiopian hydrocarbons under discussion. Hopes are high for international companies such as DP World that could invest millions of dollars to transform Berbera into a world-class commercial port.

The drive to industrialise Somaliland came about three years ago with the arrival of a new president, who Mr Dualeh had served as US campaign manager. (A substantial diaspora in America furnishes votes and campaign funds.) The president then tapped him to lead the energy ministry, where he remains the only petroleum engineer.

Mr Dualeh recalled working in the United States 20 years ago and, from afar, following Chevron and Conoco’s short-lived exploration campaign.

“They were drilling and I would read this in the papers and say, ‘Oh God, I wish I could be a part of this operation,'” he said. “And guess what? I now have the whole thing in my hands.”

ayee@thenational.ae

Read more: http://www.thenational.ae/thenationalconversation/industry-insights/energy/somaliland-exploration-in-africas-55th-state#ixzz2JHzy5EqD

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