Wednesday, September 23, 2015

Somalia's Puntland Begins Exploration in Offshore Blocks

NAIROBI (Bloomberg) -- Puntland, a semi-autonomous region of northeastern Somalia, will conduct a survey of its offshore region to search for oil as the country prepares a licensing round for exploration, the head of the Puntland Petroleum and Minerals Agency said.

The government awarded a contract this month to ION Geophysical Corp., based in Houston, to carry out the survey, Director-General Issa Farah said in an e-mailed response to questions. The company is expected to start work in the fourth quarter, he said.

“We are looking to a licensing round,” Farah said. “We hope to inform the industry quite soon.”

Puntland has avoided most of the violence carried out by al-Shabaab, an al-Qaeda-linked group that’s waged an insurgency in Somalia since 2006. The United Nations warned last year that the search for oil in Puntland and neighboring Somaliland, another semi-autonomous area, may inflame territorial disputes in the two regions.

Border Disputes

Somaliland and Puntland dispute a border criss-crossed by oil concessions that have been awarded to companies including DNO International ASA of Norway and RAK Gas LLC of the United Arab Emirates. In June, Vancouver-based Africa Energy Corp. announced its withdrawal from Puntland because of a disagreement between Somalia and Puntland’s governments about the legitimacy of production-sharing agreements and potential territorial claims on the Nugaal Block in Puntland.

Somalia’s federal constitution grants Puntland the authority to sign exploration agreements with oil companies, Farah said.

“Puntland has full authority to reach such agreements under the federal constitution of Somalia that clearly gives the states the power over their natural resources,” he said. “Puntland does not require any such approval from the federal government.”

Puntland has demarcated its offshore territory into 25 blocks covering 180,000 km2 (69,500 mi2), ION Geophysical said in a Sept. 1 statement. Seven of the blocks are in the Gulf of Aden and the remaining 18 are in the Indian Ocean.

“Puntland’s government is optimistic of its acreage potential and we hope this survey will help realize that,” Farah said.

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