Oil & Gas Africa: Disputes Simmer Over Exploration Rights In Eastern Africa

March 2, 2015

The discovery of large reserves of oil and gas has raised the profile of eastern Africa countries, with the potential of joining world’s energy producers. But  the new found reserves have brought a bigger problem and triggered escalating disputes among the soon to be new oil states in Africa.

From the Horn of Africa to the Great Lakes, tussles over exploration blocks are fast morphing into full-blown disputes that analysts warn risk slowing the search of oil and gas and create uncertainty in ownership of tens of billions of barrels of oil.

Horn Petroleum Corporation, a Canadian oil and gas company, on Feb. 12, 2015 said it was freezing exploration activities in the semi-autonomous Somalia Puntland until it resolved a dispute over oil concession contract with the government of the Federal Republic of Somalia.

“The company has informed the Government of Puntland (Somalia) that the company will be significantly reducing its presence in Bosaso, Puntland and will refrain from any operational activity and associated expenditures pending a resolution of the political situation between the Regional Government of Puntland and the Federal Government of Somalia regarding the legitimacy of oil concession contracts,” Keith Hill, Horn Petroleum executive chairman said.

Horn Petroleum holds a 60 percent interest and operatorship in the Dharoor and Nugaal blocks within Somalia.

“Given the considerable efforts taken by the company to date in Puntland (Somalia), the company has requested a two year extension to the current exploration period from the Government of Puntland to allow time for these political challenges to be resolved,” Hill said adding that as at September 30, 2014 intangible exploration assets related to these properties amounted to approximately $91 million.

Somalia vs Kenya

Somalia too has another dispute with Kenya over sovereign rights to use of resources around their shared India Ocean off-shore border territory where tests have shown potential reserves of gas.

“Porous borders and unsettled trans-boundary disputes have already created tensions surrounding exploration for Kenya’s oil and gas,” Patricia I. Vasquez, an oil and gas expert says in review titled: Kenya at a Crossroads: Hopes and Fears Concerning the Development of Oil and Gas Reserves.

The dispute with Somalia is related to the granting of 13 offshore exploration licenses by Nairobi — to companies like Italian Eni, French Total and US Anadarko — in sea boundaries disputed by both countries.

Somalia in August 2014 moved to the International Court of Justice in The Hague to determine the maritime boundary between the coastal nations, which disagree about the rights for exploration and collect revenue from oil discoveries.

Somalia asked the court to intervene, saying “diplomatic negotiations, in which their respective views have been fully exchanged, have failed to resolve this disagreement,”

Somalia has also petitioned the UN body that determines international maritime borders to shelve applications by its neighbours Kenya, Tanzania and Yemen for allocation of additional territory off their respective coastlines.

Somalia in July 2014 filed a formal claim for a bigger chunk of continental shelf but urged the UN Convention on the Law of the Sea (UNCLOS) not to consider applications earlier made by the three countries until the pending disputes among them are resolved.

“The purported claim by the Republic of Kenya includes maritime areas claimed by the Federal Republic of Somalia, thereby resulting in an overlapping area which, for the same purposes, constitutes the area under dispute” Somalia said in submission to UNCLOS dated July 21, 2014.

The horn of Africa country said it is ready to enter into consultations with Kenya with a view of reaching an agreement or understanding which would allow the Commission to consider and make recommendations on submissions by each of the two coastal States in the areas under dispute.

“Pending such an agreement or understanding, Somalia requests the Commission not to take any steps that would prejudice any future bilateral delimitation in the maritime area concerned,” Somalia further said.

Somalia vs Tanzania & Yemen

Similar caveats were filed by Somalia against Tanzania and Yemen that also eye larger territory of the shared Indian Ocean.

“There is a potential overlap between the Somali and the Tanzanian claims as regards the areas of the continental shelf beyond 200 nautical miles,” Somalia said.

Kenya and Somalia signed a memorandum of understanding in 2009 that the border would run east along the line of latitude, but Somalia, which has lacked an effective central government since 1991, then rejected the agreement in Parliament.

Somalia’s government in 2012 accused Kenya of awarding offshore oil and gas exploration blocks illegally to several multinationals because the concessions lie in waters claimed by Somalia. Kenya rejected the accusation that ownership of the blocks was contested and said there was no need to hold up exploration.

Both countries have since submitted separate submissions to the UN agency seeking to claim additional territory on the shared Indian Ocean border.

According to the UN Convention on the Law of the Sea all countries that border the ocean are allowed to use the 200 miles into the ocean for exclusive economic purposes without interference from other countries.

Kenya formally laid claim to additional 103,320 square kilometres of sea bed off its coastline — beating the April 13, 2013 deadline that was set for the submissions.

Failure to beat the deadline would have left all exploration and exploitation rights over the territory in the hands of the International Seabed Authority (ISA).Failure to secure such rights would also mean that firms eyeing investments in such zones would have to go through strenuous and expensive processes to secure permission from the ISA.

The provisions exempt developing countries that are net importers of a mineral resources produced from its continental shelf from financing the exploration of non-living resources beyond the 200 nautical mile limit. Kenya and Somalia are net importers of oil and gas and qualify for the exemption.

Kenya Vs Tanzania

Kenya is also in talks with Tanzania over the demarcation of their shared Indian Ocean territory as the scramble for off shore resources intensified. Tanzania made a late claim in 2012 for its share of the Indian Ocean territory, delaying the commencement of proceeding to decide the demarcation of the extra sea bed claimed by Kenya and Somalia.

Kenya, by virtue of sharing a common border with Tanzania, it had to await Tanzania’s final submission to get the UN’s verdict on its application because the arbiter must receive all applications from neighbouring states to demarcate the new borders.

In yet another feud, Tanzania has been caught in a long-time territorial dispute with Malawi concerning Lake Malawi, thought to sit over highly coveted oil and gas reserves.

Malawi claims sovereignty over the entirety of Africa’s third largest lake, while Tanzania says 50 percent is part of its territory. The row could worsen if significant oil and gas discoveries are made.

Tensions along the border between Democratic Republic of Congo (DRC) and Uganda have also risen over the last decade following the discovery of massive oil and gas reserves around the Lake Albert region.

– See more at: http://afkinsider.com/88551/oil-gas-africa-disputes-simmer-exploration-rights-eastern-africa/#sthash.qwXhJoBH.dpuf

Source: AFK Insider

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