Sunday, September 27, 2015

British Oil Firm Accused of Corruption in Somalia Exploration Deal
by Henry Ridgwell

A British oil exploration firm has been accused of corrupt payments to government officials in Somalia in return for rights to explore offshore for hydrocarbons, a claim the company denies.

No one knows exactly how much oil and gas lies off Somalia’s coast, but some industry experts estimate the figure at 110 billion barrels.

In 2013, the British start-up firm Soma Oil and Gas signed an agreement with the Somali government to explore for hydrocarbons — the first exploration deal since Somalia plunged into civil war in the early 1990s.

Soma’s Chief Executive Bob Sheppard told VOA the site offers enough potential — if realized — to kick-start Somalia’s war-ravaged economy.

“So we think we’ve really started the hydrocarbon regime in Somalia, and ... as a result of that, we hope, with a bit of luck and some patience and commitment, that this Somalia can turn to be one of the major hydrocarbon provinces in East Africa,” Sheppard said.

The deal included what’s known as a "capacity building program" that is intended, Sheppard says, to pay the wages of key personnel, such as geologists.

But a confidential United Nations monitoring report leaked to the media says Soma paid a half-million dollars to senior Somali officials, including the head of Somalia’s oil ministry.

“We think the allegations are baseless," Sheppard said. "SOMA has always conducted its operations in a lawful and ethical manner.”

Britain’s Serious Fraud Office has launched an investigation into the deal, and Somalia’s government says it is also investigating the claims.

Mogadishu’s oil ministry points out that Soma was the only company willing to take the considerable security risks of exploring for oil off Somalia, one of the world's most unstable countries.

Somalia’s President Hassan Sheikh Mohamud said this week the country is working to attract further investment.

“Since we came to office, Somalia has been working very hard to attract direct foreign investment in the near future," he said. "To make that dream true, we have been preparing for the legal framework that makes this happen on the ground."

According to a report by Reuters, the U.N. in 2014 "called for a moratorium on any new exploration deals in Somalia, warning such agreements could fuel tensions and potentially spark new conflicts as rivals fight for resources in the fragile Horn of Africa nation."

Soma Oil is chaired by Lord Michael Howard, for leader of the British Conservative Party.

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