Somaliland: ARE OIL AND GAS BLOCS IN SOMALILAND VIABLE?

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somaliland map

By: Hassan Haji Farah Dudu
OIL AND GAS OPERATIONS AND THE ENVIRONMENT

(Somalilandsun) – Socio-economic viability and environmental sustainability are fundamental issues in oil and gas operations. Generally, the “upstream” works of these operations have significant impacts on the environment, including the deterioration of physical and biological environments that lead to negative benefits for local populations, often following poor implementation of infrastructure activities and mitigation measures.

In all areas of oil development throughout the world, the destruction of the ecosystems results in negative socioeconomic effects on the human environment. Somaliland is not immune to these threats. Under such circumstances, if the Ministry concerned does not ratify, enforce and implement appropriate safeguards, the contracted oil companies will not be held responsible for potential violations of the international conventions.

Accordingly, to ensure the development of the oil and gas in an environmentally friendly and sustainable manner for the benefit of the people, the industry must be governed by a strong regulatory framework that includes a petroleum policy and legislation that includes an Upstream Petroleum Policy, an Upstream Petroleum Act and a Petroleum Revenue Act as well as a new Mining Code. Although it is alleged that the Ministry initiated the development of these referenced documents, to date, these are not available in the public domain.

In this context, it is important to place these findings in the public domain because they include an all-inclusive Environmental and Social Impact Assessment (ESIA) study which identifies the impact of each allotted block, particularly in regards to the health and economy of the people living in and around oil sites and the physical and natural environments concerned. Typically the findings include present and future data for all operations of prospecting, research, exploration, exploitation, processing and transportation of liquid, solid or gaseous hydrocarbons. They can be identified as follows:

• Exploration during a seismic acquisition phase;
• Exploration and exploitation during drilling phase;
• Operations phase, including the transport and storage of raw materials.

These “upstream oil operations” may be classified according to the areas of exploration:

• Oil and gas operations on shore (on land);
• Oil operations off-shore (at sea) within the territorial marine limits recognized internationally.

PRELIMINARY PETROLEUM EXPLORATION WORK

All oil exploration is preceded by a preparatory phase of determining seismic straight lines which commence with gravimetric, magnetism or other methods, generally by air. The seismic acquisition is done subsurface by means of vibratory transmission waves, through soil layers of different densities. The reflection of these waves is captured, processed and interpreted to determine the geological structures of the area, and the information is used to identify areas where oil could be reserved. Geological analyses and other geophysical data are also used to do the required assessments.

Drilling during the exploration phase is intended to penetrate soil layers in different areas where seismic acquisition demonstrates the potential for accumulation of hydrocarbon and gas. These holes allow verification of the presence of hydrocarbon assumptions, and assess the quantities and the quality of resources in situ.

Seismic testing may have an important impact on the marine environment as a whole (mostly mammals and fish). Indeed, offshore petroleum seismic surveys involve sound waves to determine the depth, position and shape of the underground geological formations. Depending on their intensity, these waves could spread thousands of miles and disrupt the food and reproductive animal behavior. Also, they would be responsible for the observed stranding of marine mammals on some beaches. The “noises” produced by the seismic tests may cause irreversible hearing trauma and hearing loss in these animals and seriously disrupt their brain tracking system.

The main environmental issues related to oil “upstream” exploration are conditioned by the location of the project (off-shore or onshore), depend on the types of inputs and outputs used and the technical methods applied. The following list gives an overview of the major sources of environmental impacts of oil and gas projects observed on various sites in similar areas to those of Somaliland,

OIL EXTRACTIVE PROJECT IMPACTS ON THE LOCAL COMMUNITY

Oil is a poisonous product which threatens the natural environment and the socio-economy of the project areas. It is usually responsible for irreversible impacts affecting waters, soil, agricultural production, fauna and flora, residents and livestock health.

Therefore, a real impact attributed to the extracting/mining and operations phases of the different zones concerned happens due to (i) the destruction of the ecosystems that constitute the right livelihood of humanity and (ii) a resultant negative socio-economy of the population. Financial compensation is generally planned and budgeted; but very often, they are not able to cover the losses of which populations are economically the victims.

COMMON IMPACT OF THE OIL INDUSTRY ON THE ENVIRONMENT

Oil extraction threatens the natural environment, which regulates life, either directly by destruction of the ecosystems to create space and build industrial extractive plants or indirectly by the effects of pollution from the crude oil extraction, transport or distilleries.

THE IMPORTANCE OF THE RISK OF PIPELINE TRANSPORT

Although the identified risks are of some importance, we can estimate they are manageable, taking into account the development of the technology to prevent pipeline leakage and to proceed immediately to the pollution treatment. Those risks could be acceptable from the perspective of country development given the economic benefits for the country which would play a decisive role in the acceptance of some of the particular risks.

THE PROCESS OF THE ENVIRONMENTAL IMPACT STUDY

Taking into account the stock of scientific, human and social considerations developed and enunciated in standard Environmental and Social Impact Assessment Studies (ESIAs) for Oil and Gas, it is mandatory that a comprehensive ESIA report is prepared and presented to all stakeholders for discussions before the implementation of the project by each oil company that was allocated blocks in Somaliland. The report must be reviewed and cleared by the Government under the leadership of the Ministry of Mining and Energy, approved by the Parliament and retained for public information and scrutiny.

INVOLUNTARY RESETTLEMENT

In addition to the ESIA study, the Petroleum Project requests another very comprehensive study taking into account the problems linked to the Involuntary Resettlement of the Population living in the area of implementation of the project.

The Resettlement Plan (RP), which has to be prepared, is a very important document that is based on a development approach and addresses issues of the livelihood and living standards of the displaced persons as well as compensation for loss of assets using a participatory approach at all stages of project design and implementation.

The primary goal of the involuntary resettlement measures to be taken is to ensure that when people must be displaced they are treated equitably, and that they share in the benefits of the project that involves their resettlement. The objectives of the RP are to ensure that the disruption of the livelihood of people in the project area is minimized, to guarantee that the displaced persons receive resettlement assistance so as to improve their living standards, and to provide explicit guidance to the Government.

The improvement of these living standards should apply to host communities with Involuntary Resettlement Programs carried out by fully addressing the issues of owned land, jobs, homes, marginalization, food insecurity and loss of basic resources with respect to both the people affected and the host communities in order to minimize conflicts, and to create a common interest among the stakeholders. The full costs of resettlement activities necessary to achieve the objectives of the project should be included in the total costs of the project. The costs of resettlement like the costs of other project activities are treated as a charge against the economic benefits.

CONCLUSIONS

The broad objective of this piece is to shed light on the key issues related to the economic, environmental and social impact assessments (ESIAs) of the oil and gas development and the major challenges.

Somaliland oil and gas industry must be governed by a clear regulatory framework that includes a petroleum policy and legislation that includes an Upstream Petroleum Policy, an Upstream Petroleum Act and a Petroleum Revenue Act, and a new Mining Code. All relevant information regarding the industry must be available in the public domain.

Many oil drilling projects that promised new opportunities for a given region provided peril. In promoting her investment climate, Somaliland, as a new sovereign state on the Red Sea and Indian Ocean, must take into account lessons learnt from Nigeria and others. See link (www.bbc.com/news/business-29997074) by Howard Mustoe, Business reporter, 13 November 2014.

Mr. Farah holds Engineering, Finance and Management degrees from Trinity College, CT and Rensselaer Polytechnic Institute, NY USA. Over 40 years he held senior positions in Mobil Oil, United Technologies, Abu Dhabi National Oil Co (ADNOC), UAE and African Development Bank in areas of industrial engineering, planning physical infrastructure, investments and natural resources development. He is also an expert in natural resources for sustainable development management and a specialist in oil and gas. He is a founder and board member of African Investments and Global Connections, Inc. (AIGC) in Wilmington, Delaware, USA, a professional team of consultants specialized in the strategic evaluation of projects and feasibility studies focusing on economic, financial and environmental aspects. Visit www.ai-gc.com.

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