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Documents reveal Britain made secret deal to defend Kenya in case of invasion by Somalia
SATURDAY DECEMBER 24 2016
A member of the General Service Unit in Kula Mawe, North Eastern Province during an operation against shiftas. PHOTO | COURTESY
In Summary
By ODHIAMBO LEVIN OPIYO
More by this Author
Britain made a secret undertaking in 1967 to defend Kenya in case of an invasion by Somalia, declassified documents recently released from the Prime Minister’s office in London reveal.
The deal, known as the “Bamburi Understanding”, was a reassurance following a non-committal statement made by Mr Duncan Sandys, the British Secretary of State for the Colonies, in 1964.
Without making any concrete commitment, Mr Sandys had told Kenya’s new government that in case of an attack by Somalia, it was probable that Britain would intervene.
Somalia, which was then considered to have one of the region’s most powerful armies equipped with sophisticated Soviet-made weapons, had threatened to annex the north eastern part of Kenya in pursuit of its Greater Somalia policy. President Jomo Kenyatta’s administration had since independence in 1963 been grappling with a secessionist conflict in the north east, known as the Shifta War, that was supported by Somalia. Indeed, Somali Prime minister Muhammad Egal had told British MPs in 1962 of the intention to unite all territories occupied by Somalis in Kenya and Ethiopia
When Somalia’s aggressive action seemed likely to lead to an invasion of Kenya in 1966, President Kenyatta quickly dispatched Attorney-General Charles Njonjo and Agriculture Minister Bruce Mckenzie to London to pressure the British government to not only give reassurances of protecting Kenya but also provide more sophisticated equipment.
DECLASSIFIED DOCUMENTS
According to the declassified documents, although the British government turned down the request for arms terming it “unrealistic”, Prime Minister Harold Wilson, in a private message to President Kenyatta, committed to consider protecting Kenya from Somalia’s aggression.
This private message marked “secret” was what came to be known as the “Bamburi Understanding”.
“If Kenya were the victim of outright aggression by Somalia, the British government would give the situation most urgent consideration. While the British government cannot in advance give the Kenya Government any assurance of automatic assistance, the possibility of Britain giving the Kenyans assistance in the event of organised and unprovoked armed attack by Somalia is not precluded,” the message read.
Nine months after the “Bamburi Understanding”, a key diplomatic milestone was achieved when mediation spearheaded by Zambian President Kenneth Kaunda led to the signing of the Arusha Memorandum between Kenya and Somalia to end border hostilities.
But the Somalia government, which had signed the Arusha Memorandum, was overthrown and replaced by a military junta led by General Siad Barre in 1969.
This resulted in apprehension with senior Kenyan officials fearing that General Barre was more likely to revive and pursue the Greater Somalia ambitions actively.
ANOTHER BLOW
As if that was not enough, Kenya suffered another blow when the British Labour administration, which had made defence commitments through the “Bamburi Understanding,” was replaced by the Conservatives under Prime Minister Edward Heath in June 1970, creating further anxiety.
This sudden turn of events forced President Kenyatta to send Mr Njonjo and Mr Mckenzie with a private letter seeking reaffirmation from the new British Prime Minister on maintaining the security understanding.
“I have asked them (Mr Njonjo and Mr Mckenzie) to discuss with you what we now here call the Bamburi Understanding. I hope that you will kindly discuss this matter with my ministers who have my authority to do so. I am keen that the understanding should be continued with your government,” read the letter dated August 30, 1970 and signed by President Kenyatta.
Mr Mckenzie, who was on sick leave in Britain, booked the appointment with the Foreign and Commonwealth Office (FCO) to deliver the letter to Number 10 Downing Street, the Prime Minister’s residence in London.
The appointment was confirmed for September 8, 1970 at 11 am.
A BRIEF
Four days before the meeting, a brief was forwarded to Prime Minister Heath by the FCO warning that President Kenyatta was going to be unhappy if Britain refused to carry on with the “Bamburi Understanding”. The brief argued that Kenyans were among the most moderate on the “Arms for South Africa” issue — in reference to Britain selling weapons to the Apartheid government despite widespread opposition from many African countries — making it crucial for the new British government not to antagonise them.
In the brief that was written in the context of the Cold War between the Western and Eastern blocs, the Prime Minister was also advised to raise British concerns with the Kenyan emissaries about the Soviet Union’s attempts to penetrate East Africa. There was also to be the clincher that the former colonial masters were willing to co-operate on the defence problem so long as British soldiers were allowed continued access to Kenyan military facilities.
Biographical notes annexed to the brief further give insights on how the British viewed the two Kenyan ministers.
Mr Njonjo was described as one of the closest and friendliest ministers to the British High Commission in Nairobi. Although he lacked political will or the grassroots support to win the presidency, he was viewed as a leading architect in the Kenyatta succession.
ALSO INFORMED
The Prime Minister’s office was also informed that Mr Njonjo loved to have mid-morning tea with hot milk but there should also be Indian tea with cold milk and Chinese tea with lemon.
In their brief, the British officials, however, sneered that Mr Njonjo’s undoing in the Kenyan political context was that he was “obviously presenting a very Western image politically and personally even to the extent of a black jacket and striped trousers and a rose buttonhole daily”.
On his part, Mr Mckenzie was described as a “dynamo of the Kenya Government machine” whose influence extended far beyond his Agriculture ministry. He was also described as a member of President Kenyatta’s inner circle who had gained the respect of the Kenyan European community with whom he previously had a difficult relationship.
“But he always puts Kenya’s interest first. Tries to be genuinely non-aligned when it serves Kenya’s interests,” added the FCO brief.
However, Kenya had a special request to make: It wanted Mr Njonjo’s presence in London and the existence of the “Bamburi Understanding” kept secret.
Not even the Kenyan High Commissioner in London was supposed to know about the mission, according to a confidential letter from a Mr McClauney of the FCO to the Prime Minister’s office.
STATEMENT RELEASED
Mr McClauney, however, advised that if Mr Njonjo’s visit leaked, a statement should be released that he had brought a personal message from President Kenyatta and that it was not the practice to disclose the contents of such messages. And if the media assumed that the subject of the meeting was selling arms to South Africa, then this assumption should be allowed to stand.
The secrecy of the meeting was emphasised to Prime Minister Heath by the British Secretary of State: “While I understand that you wish in general for publicity to be given to your discussion with African and other Commonwealth leaders, we feel that in this case it would be right to respect the Kenyan request, in so far as we can do so without appearing disingenuous.”
Arrangements were, therefore, made for Mr Njonjo and Mr Mckenzie to enter the British Prime Minister’s office through the Cabinet office instead of the main entrance to avoid public attention.
During the meeting, the declassified documents indicate, Mr Mckenzie pointed out the importance of reaffirming the “Bamburi Understanding”. In return, the British forces would be free to continue using Nairobi Airport, the Mombasa port as well as military training facilities in Kenya. They also had great interest in retaining the British special forces who were training Kenya’s General Service Unit commandos and the Special Branch. The visiting ministers linked the work the British special forces were doing in Kenya to the security arrangement against Somali’s aggression.
NOTHING WRONG
In response, the British Prime Minister said that in principle he saw nothing wrong in reaffirming the “Bamburi Understanding” but promised to have the issue fully considered and a reply sent to President Kenyatta.
Prime Minister Heath also promised to consider the request to have the special forces remain in Kenya and pointed out his government did not wish to reduce the use of Kenyan military facilities by British troops. He, however, warned that British military resources were stretched at the time because of instability in Northern Ireland.
But the discussions went beyond defence matters, according to the documents. Mr Njonjo and Mr Mckenzie also discussed development and diplomatic issues. For example, they said that while they appreciated Britain’s support, there were problems with the administration of the aid programme since conditions laid down by the previous Labour government were inflexible, projects were delayed and important payments also held up longer than necessary.
Mr Mckenzie suggested it would be helpful if Kenya’s Finance minister Mwai Kibaki, who was at an International Monetary Fund meeting in Copenhagen, passed through London to meet the British minister for Overseas Development.
SPECIAL INTEREST
The two also felt that Kenya no longer enjoyed close contacts with British government officials and urged Prime Minister Heath to ask one of his junior ministers to take a special interest in Africa and get to know the continent’s leaders personally.
Following the meeting, British officials embarked on drafting the Prime Minister’s reply. But they also secretly noted Mr Mckenzie’s and Mr Njonjo’s ignorance on the “Bamburi Understanding” for linking it to the presence of British special forces and access to Kenyan military facilities.
While the arrangement for British forces to use Kenyan military facilities, airports and harbours was agreed upon at independence with Mr Sandys, who was the British Secretary of State for the Colonies, and the training of the GSU commandoes came into existence in December 1964, the “Bamburi Understanding” was in January 1967.
But British Foreign Secretary Sir Alec Douglas-Home did not think it was worth getting into an argument on the three issues in the Prime Minister’s letter to President Kenyatta.
IN EXISTENCE
As late as May 1981, the agreement was still in existence, according to a brief prepared for Margaret Thatcher, the first female British Prime minister (1979-1990), when she met Kenya’s then Foreign Minister Robert Ouko in London.
“Kenya has our friendship/support. Kenya policy to stand on her own feet militarily is right. We will continue to help Kenya absorb new equipment,” said the brief.
It added that in case Somali attacked Kenya “UK would give all help it could, but it is unlikely our response could include commitment of combat troops. Nor indeed do we suppose that Kenya would wish for this.”
Ironically, despite the fears in the 1960s, it was the Kenyan Defence Forces that would go into Somalia decades later, in October 2011, to pursue al-Shabaab terrorists. The Kenyan forces are now part of the African Union Mission in Somalia that is trying to restore security in the country that has been grappling with civil war since the collapse of the Barre regime in 1991.
Documents reveal Britain made secret deal to defend Kenya in case of invasion by Somalia
SATURDAY DECEMBER 24 2016
A member of the General Service Unit in Kula Mawe, North Eastern Province during an operation against shiftas. PHOTO | COURTESY
In Summary
- Without making any concrete commitment, Mr Sandys had told Kenya’s new government that in case of an attack by Somalia, it was probable that Britain would intervene.
- Somalia, which was then considered to have one of the region’s most powerful armies equipped with sophisticated Soviet-made weapons, had threatened to annex the north eastern part of Kenya in pursuit of its Greater Somalia policy.
By ODHIAMBO LEVIN OPIYO
More by this Author
Britain made a secret undertaking in 1967 to defend Kenya in case of an invasion by Somalia, declassified documents recently released from the Prime Minister’s office in London reveal.
The deal, known as the “Bamburi Understanding”, was a reassurance following a non-committal statement made by Mr Duncan Sandys, the British Secretary of State for the Colonies, in 1964.
Without making any concrete commitment, Mr Sandys had told Kenya’s new government that in case of an attack by Somalia, it was probable that Britain would intervene.
Somalia, which was then considered to have one of the region’s most powerful armies equipped with sophisticated Soviet-made weapons, had threatened to annex the north eastern part of Kenya in pursuit of its Greater Somalia policy. President Jomo Kenyatta’s administration had since independence in 1963 been grappling with a secessionist conflict in the north east, known as the Shifta War, that was supported by Somalia. Indeed, Somali Prime minister Muhammad Egal had told British MPs in 1962 of the intention to unite all territories occupied by Somalis in Kenya and Ethiopia
When Somalia’s aggressive action seemed likely to lead to an invasion of Kenya in 1966, President Kenyatta quickly dispatched Attorney-General Charles Njonjo and Agriculture Minister Bruce Mckenzie to London to pressure the British government to not only give reassurances of protecting Kenya but also provide more sophisticated equipment.
DECLASSIFIED DOCUMENTS
According to the declassified documents, although the British government turned down the request for arms terming it “unrealistic”, Prime Minister Harold Wilson, in a private message to President Kenyatta, committed to consider protecting Kenya from Somalia’s aggression.
This private message marked “secret” was what came to be known as the “Bamburi Understanding”.
“If Kenya were the victim of outright aggression by Somalia, the British government would give the situation most urgent consideration. While the British government cannot in advance give the Kenya Government any assurance of automatic assistance, the possibility of Britain giving the Kenyans assistance in the event of organised and unprovoked armed attack by Somalia is not precluded,” the message read.
Nine months after the “Bamburi Understanding”, a key diplomatic milestone was achieved when mediation spearheaded by Zambian President Kenneth Kaunda led to the signing of the Arusha Memorandum between Kenya and Somalia to end border hostilities.
But the Somalia government, which had signed the Arusha Memorandum, was overthrown and replaced by a military junta led by General Siad Barre in 1969.
This resulted in apprehension with senior Kenyan officials fearing that General Barre was more likely to revive and pursue the Greater Somalia ambitions actively.
ANOTHER BLOW
As if that was not enough, Kenya suffered another blow when the British Labour administration, which had made defence commitments through the “Bamburi Understanding,” was replaced by the Conservatives under Prime Minister Edward Heath in June 1970, creating further anxiety.
This sudden turn of events forced President Kenyatta to send Mr Njonjo and Mr Mckenzie with a private letter seeking reaffirmation from the new British Prime Minister on maintaining the security understanding.
“I have asked them (Mr Njonjo and Mr Mckenzie) to discuss with you what we now here call the Bamburi Understanding. I hope that you will kindly discuss this matter with my ministers who have my authority to do so. I am keen that the understanding should be continued with your government,” read the letter dated August 30, 1970 and signed by President Kenyatta.
Mr Mckenzie, who was on sick leave in Britain, booked the appointment with the Foreign and Commonwealth Office (FCO) to deliver the letter to Number 10 Downing Street, the Prime Minister’s residence in London.
The appointment was confirmed for September 8, 1970 at 11 am.
A BRIEF
Four days before the meeting, a brief was forwarded to Prime Minister Heath by the FCO warning that President Kenyatta was going to be unhappy if Britain refused to carry on with the “Bamburi Understanding”. The brief argued that Kenyans were among the most moderate on the “Arms for South Africa” issue — in reference to Britain selling weapons to the Apartheid government despite widespread opposition from many African countries — making it crucial for the new British government not to antagonise them.
In the brief that was written in the context of the Cold War between the Western and Eastern blocs, the Prime Minister was also advised to raise British concerns with the Kenyan emissaries about the Soviet Union’s attempts to penetrate East Africa. There was also to be the clincher that the former colonial masters were willing to co-operate on the defence problem so long as British soldiers were allowed continued access to Kenyan military facilities.
Biographical notes annexed to the brief further give insights on how the British viewed the two Kenyan ministers.
Mr Njonjo was described as one of the closest and friendliest ministers to the British High Commission in Nairobi. Although he lacked political will or the grassroots support to win the presidency, he was viewed as a leading architect in the Kenyatta succession.
ALSO INFORMED
The Prime Minister’s office was also informed that Mr Njonjo loved to have mid-morning tea with hot milk but there should also be Indian tea with cold milk and Chinese tea with lemon.
In their brief, the British officials, however, sneered that Mr Njonjo’s undoing in the Kenyan political context was that he was “obviously presenting a very Western image politically and personally even to the extent of a black jacket and striped trousers and a rose buttonhole daily”.
On his part, Mr Mckenzie was described as a “dynamo of the Kenya Government machine” whose influence extended far beyond his Agriculture ministry. He was also described as a member of President Kenyatta’s inner circle who had gained the respect of the Kenyan European community with whom he previously had a difficult relationship.
“But he always puts Kenya’s interest first. Tries to be genuinely non-aligned when it serves Kenya’s interests,” added the FCO brief.
However, Kenya had a special request to make: It wanted Mr Njonjo’s presence in London and the existence of the “Bamburi Understanding” kept secret.
Not even the Kenyan High Commissioner in London was supposed to know about the mission, according to a confidential letter from a Mr McClauney of the FCO to the Prime Minister’s office.
STATEMENT RELEASED
Mr McClauney, however, advised that if Mr Njonjo’s visit leaked, a statement should be released that he had brought a personal message from President Kenyatta and that it was not the practice to disclose the contents of such messages. And if the media assumed that the subject of the meeting was selling arms to South Africa, then this assumption should be allowed to stand.
The secrecy of the meeting was emphasised to Prime Minister Heath by the British Secretary of State: “While I understand that you wish in general for publicity to be given to your discussion with African and other Commonwealth leaders, we feel that in this case it would be right to respect the Kenyan request, in so far as we can do so without appearing disingenuous.”
Arrangements were, therefore, made for Mr Njonjo and Mr Mckenzie to enter the British Prime Minister’s office through the Cabinet office instead of the main entrance to avoid public attention.
During the meeting, the declassified documents indicate, Mr Mckenzie pointed out the importance of reaffirming the “Bamburi Understanding”. In return, the British forces would be free to continue using Nairobi Airport, the Mombasa port as well as military training facilities in Kenya. They also had great interest in retaining the British special forces who were training Kenya’s General Service Unit commandos and the Special Branch. The visiting ministers linked the work the British special forces were doing in Kenya to the security arrangement against Somali’s aggression.
NOTHING WRONG
In response, the British Prime Minister said that in principle he saw nothing wrong in reaffirming the “Bamburi Understanding” but promised to have the issue fully considered and a reply sent to President Kenyatta.
Prime Minister Heath also promised to consider the request to have the special forces remain in Kenya and pointed out his government did not wish to reduce the use of Kenyan military facilities by British troops. He, however, warned that British military resources were stretched at the time because of instability in Northern Ireland.
But the discussions went beyond defence matters, according to the documents. Mr Njonjo and Mr Mckenzie also discussed development and diplomatic issues. For example, they said that while they appreciated Britain’s support, there were problems with the administration of the aid programme since conditions laid down by the previous Labour government were inflexible, projects were delayed and important payments also held up longer than necessary.
Mr Mckenzie suggested it would be helpful if Kenya’s Finance minister Mwai Kibaki, who was at an International Monetary Fund meeting in Copenhagen, passed through London to meet the British minister for Overseas Development.
SPECIAL INTEREST
The two also felt that Kenya no longer enjoyed close contacts with British government officials and urged Prime Minister Heath to ask one of his junior ministers to take a special interest in Africa and get to know the continent’s leaders personally.
Following the meeting, British officials embarked on drafting the Prime Minister’s reply. But they also secretly noted Mr Mckenzie’s and Mr Njonjo’s ignorance on the “Bamburi Understanding” for linking it to the presence of British special forces and access to Kenyan military facilities.
While the arrangement for British forces to use Kenyan military facilities, airports and harbours was agreed upon at independence with Mr Sandys, who was the British Secretary of State for the Colonies, and the training of the GSU commandoes came into existence in December 1964, the “Bamburi Understanding” was in January 1967.
But British Foreign Secretary Sir Alec Douglas-Home did not think it was worth getting into an argument on the three issues in the Prime Minister’s letter to President Kenyatta.
IN EXISTENCE
As late as May 1981, the agreement was still in existence, according to a brief prepared for Margaret Thatcher, the first female British Prime minister (1979-1990), when she met Kenya’s then Foreign Minister Robert Ouko in London.
“Kenya has our friendship/support. Kenya policy to stand on her own feet militarily is right. We will continue to help Kenya absorb new equipment,” said the brief.
It added that in case Somali attacked Kenya “UK would give all help it could, but it is unlikely our response could include commitment of combat troops. Nor indeed do we suppose that Kenya would wish for this.”
Ironically, despite the fears in the 1960s, it was the Kenyan Defence Forces that would go into Somalia decades later, in October 2011, to pursue al-Shabaab terrorists. The Kenyan forces are now part of the African Union Mission in Somalia that is trying to restore security in the country that has been grappling with civil war since the collapse of the Barre regime in 1991.
Mogadishu, Somalia (SOMALI AGENDA) – SOMALI AGENDA has received copies of the latest report by the Somalia and Eritrea Monitoring Group and an assorted documents detailing what the United Nations Monitors call “a serious conflict of interest” in the relationship between SOMA Oil and Gas Company and the country’s Ministry of Petroleum and Natural Resources. The UN Monitors accuse SOMA Oil & Gas Co. of regularly paying key members at the Ministry of Petroleum and Natural Resources in return for the latter providing protections against scrutiny by other Somali government bodies.
The United Nations Monitors effectively calls for a moratorium on oil and gas explorations in Somalia. The United Nations Monitors are controversial in Somalia and observers accuse the UN group of pursuing a witch hunt against individuals in South and Central Somalia. They accuse the UN monitors of overstepping their mandate by blackmailing government officials and threatening the country’s sovereignty and territorial integrity.
The former head of the Somalia and Eritrea Monitoring Group Matthew Bryden is considered an active campaigner for the secession of Somalia’s separatist region of Somaliland. This year, a top Somalia and Eritrea Monitoring Group Member Dinesh Mahtani was fired by the United Nations after it was discovered that he was using his position to push for a regime change in Eritrea.
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The United Nations Monitors effectively calls for a moratorium on oil and gas explorations in Somalia. The United Nations Monitors are controversial in Somalia and observers accuse the UN group of pursuing a witch hunt against individuals in South and Central Somalia. They accuse the UN monitors of overstepping their mandate by blackmailing government officials and threatening the country’s sovereignty and territorial integrity.
The former head of the Somalia and Eritrea Monitoring Group Matthew Bryden is considered an active campaigner for the secession of Somalia’s separatist region of Somaliland. This year, a top Somalia and Eritrea Monitoring Group Member Dinesh Mahtani was fired by the United Nations after it was discovered that he was using his position to push for a regime change in Eritrea.
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Lord Flacko
VIP
@Canuck Soma Oil and Gas is a private company founded in 2013.
They don't own Somali oil, they've done some explorations. Of course Somalia doesn't own shares in a private company they had nothing to do with. It is misleading to suggest they used to own the company then sold it in a span of 3 years.
But recently lost a deal with an Italian company to further their exploration and open up Somali oil fields.
They're known for bribing Ministers and others
Signed by Daud Mohamed Omar, (however he was switched out with Abdirizak Omar Mohamed by Omar Sharmarke, he also held the position previously in 2012 before being ousted in 2013.),
but of course everybody who was involved in the chain of command in this bribing, though allegations were limited to the Ministries, should be investigated and charged with treason. Corruption on our natural resources is a great shame
But the charges against them (Soma Oil and Gas),?which stopped them from getting a deal, was dropped mere weeks ago. The company however is reported to be desperate, as their cash savings are in the low end of 6 figures.
In my personal opinion all private Oil, gas and natural resource-based companies should be banned and the sector should be owned fully by the government. That's how it's done in every country that is smart with their oil.
They don't own Somali oil, they've done some explorations. Of course Somalia doesn't own shares in a private company they had nothing to do with. It is misleading to suggest they used to own the company then sold it in a span of 3 years.
But recently lost a deal with an Italian company to further their exploration and open up Somali oil fields.
They're known for bribing Ministers and others
And evident by these documentsTue Aug 4, 2015 | 6:07 AM BST
U.N. monitors accuse British oil firm of 'payoffs' to Somali officials
A sign is displayed in an unmarked Serious Fraud Office vehicle parked outside a building, in Mayfair, central London March 9, 2011.
REUTERS/ANDREW WINNING
(Reuters) - U.N. sanctions experts have accused British company Soma Oil and Gas of making large payments to Somalia's oil ministry that created a "serious conflict of interest," some of which appeared to have been used to pay off senior officials.
In a report to a U.N. Security Council committee, the experts said Soma paid nearly $600,000 (£384,940) as part of efforts to protect and expand an energy exploration contract it signed with the ministry in 2013.
According to a confidential report compiled by the experts on the U.N. Somalia and Eritrea Monitoring Group, which was reviewed by Reuters, Soma also paid $495,000 to a lawyer who was advising the Somali government when it was negotiating a contract with the company. The eight-member panel of investigators that compiled the 28-page report monitors compliance with U.N. sanctions.
The allegations outlined in the report, which has been submitted to the U.N. Security Council's Somalia/Eritrea sanctions committee, triggered an investigation into Soma by Britain's Serious Fraud Office (SFO), according to people familiar with the situation.
Signed by Daud Mohamed Omar, (however he was switched out with Abdirizak Omar Mohamed by Omar Sharmarke, he also held the position previously in 2012 before being ousted in 2013.),
but of course everybody who was involved in the chain of command in this bribing, though allegations were limited to the Ministries, should be investigated and charged with treason. Corruption on our natural resources is a great shame
But the charges against them (Soma Oil and Gas),?which stopped them from getting a deal, was dropped mere weeks ago. The company however is reported to be desperate, as their cash savings are in the low end of 6 figures.
In my personal opinion all private Oil, gas and natural resource-based companies should be banned and the sector should be owned fully by the government. That's how it's done in every country that is smart with their oil.
Somalia: The Next Oil Superpower?
Alex Dick-Godfrey
January 15, 2015
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Last month, Soma Oil and Gas, a London based energy company, searching for hydrocarbon deposits off the coast of Somalia, announced that it had completed a seismic survey to ascertain the potential for recoverable oil and gas deposits. Although further details have yet to be released, chief executive Rob Sheppard announced that the results were encouraging. However, Somalia, and potential investors, should proceed with caution when considering entering this frontier market.
East African oil exploration, and in Somalia specifically, is not a secret. Energy firms like Royal Dutch Shell and Exxonmobil operated in Somalia before the government collapsed in 1991. But recent gains against the insurgent group al Shabaab in the south and the decrease in piracy off the coast have sparked a regeneration of the industry. The Somali president, riding these positive evolutions, recently stated that the country is “open for business.”
Although recent security developments are encouraging, substantial hurdles still exist. The Heritage Institute recently released “Oil in Somalia: Adding Fuel to the Fire?,” by Dominik Balthasar. The paper discusses how the oil industry in Somalia could have a promising future, but it also explores the risks facing Somalia if the development of its petroleum resources is not carefully managed. Balthasar rightly asks, “is Somalia ready for oil?”
The historic challenges that have limited business opportunities in Somalia, domestic insurgency and piracy, have diminished for now, but these threats have not disappeared. Al Shabaab has been largely pushed out of southern Somalia by multinational forces, but has recently proven that it is still able to operate in the north of Kenya. As Kenya flexes to counter al Shabaab in its own country, it could provide an opportunity for al Shabaab to return to its previous strongholds in Somalia. And even as piracy has largely stopped, it is conceivable that al Shabaab or others could see oil tankers as opportunities to resurrect that practice as well.
Beyond these security challenges there may be political disadvantages to developing the hydrocarbon sector in Somalia. Balthasar notes, among other things, that oil will likely exacerbate existing rifts and political tensions. In the context of the recent political turmoiland contentious federalism process, it is clear that any foreign oil companies would face a high degree of political instability and uncertainty. Balthasar also points out that the legal and constitutional conditions in Somalia are ambiguous in determining who can enter or negotiate contracts with oil companies. Without a well-defined regulatory environment for oil and gas resources, federal states, semi-autonomous regions, and the central government could all separately negotiate and enter into conflicting extraction agreements with private companies. The opaque regulatory nature of these resources has already proven problematic in the semi-autonomous regions of Puntland and Somaliland. Even with updated agreements on how to negotiate for and claim oil fields, Puntland and Somaliland have already leveraged their autonomy and granted their own licenses without the central government’s blessing. This is all likely to lead to further turmoil and maybe even conflict over profitable fields and the distribution of revenues.
Somalia is probably not ready for oil development. With excellent access to shipping lanes and supposedly massive untapped wealth (perhaps as much as 110 billion barrels) it is no surprise that multinational oil companies are intrigued, but responsible investors would be wise to think twice. The underlying political instability and security challenges of Somalia will likely inhibit the long term feasibility and profitability of these projects. It could also cause backsliding for the hard fought improvements in Somalia’s government.
This piece appears courtesy of CFR's Africa in Transition blog.
Somalia may pay 90% of oil revenue to explorer under draft deal
5/28/2015
ILYA GRIDNEFF
NAIROBI (Bloomberg) -- Soma Oil & Gas Holdings Ltd., chaired by former U.K. Conservative Party leader Michael Howard, has proposed a deal with the Somali government that may grant it as much as 90% of the country’s prospective oil revenue.
A draft production-sharing agreement, obtained by Bloomberg from an official close to the negotiations, sets the state’s share of revenue on the first 25,000 bopd at 10% if found at a depth of greater than 1,000 m and when oil costs less than $70 a barrel. If output exceeds 150,000 bbl, Somalia’s take rises to 30%. Crude for delivery in June fell 0.4 percent to $57.30/bbl at 4:45 p.m. in London on Thursday.
Any deal with Somalia will include terms that are “fair and balanced” and reflect those signed in other high-risk, offshore oil and gas jurisdictions, Chief Executive Officer Robert Sheppard said in an e-mailed response to questions on May 27. “The proposals being discussed are in line with current industry standards.”
Somalia is trying to attract investors to help rebuild its economy after African Union-backed government forces regained control of parts of its central and southern region seized by al-Shabaab in an insurgency that began in 2006. The Horn of Africa nation is scheduled to hold a general election in 2016, the first since 1967, according to the Heritage Institute, a Mogadishu-based research organization.
Oil and gas output may start by 2020 after exploration work showed the potential for “huge” offshore deposits, former Petroleum Minister Da’ud Mohamed Omar said in February.
Production Model
The government is drafting a production-sharing-agreement model before signing any deals, the Petroleum Ministry said April 20. “Nothing has been signed and there are no developments,” Fatima Mohamed, personal assistant to Petroleum Minister Mohamed Moktar Ibrahim, said by phone on May 25 after being asked to comment on the Soma proposal.
The draft agreement calls for the London-based company to be granted a four-year royalty holiday for oil and gas found less than 1,000 m below the sea surface. Deeper finds should carry a six-year moratorium, the document shows. Soma also requested a moratorium on taxes for at least 10 years.
Johnny West, founder of Berlin-based OpenOil, the world’s largest public online database of oil contracts, compared the terms of the Soma PSA to nine “early-stage” offshore African contracts, including post-war Liberia, that have potentially high costs, high exploration risk and various degrees of political risk.
‘Significant’ Deferment
“None of them defer significant revenue streams to the government for as long as Soma,” he said. “The next lowest cap on upside to the government of a mega-find is effectively 60% of profit, half as much again as in the Soma deal,” he said in a phone interview.
Soma proposes that if oil prices are at $70 to $150/bbl, the company receives 70% of revenue for the first 25,000 bbl and 50% on production in excess of 150,000 bopd. The company also offers the government 50% for the first 25,000 barrels and 30% for production above 150,000 bbl if oil rises above $150/bbl -- which would be a record high.
“Normally, fiscal and commercial terms for petroleum exploration, development and production are carefully crafted by the host government to balance the perceived petroleum prospectivity of a region,” said Michael McWalter, an international oil and gas specialist and former adviser to the Ghanaian government. “If oil and gas are abundant, the government takes a greater percentage of the net value of the petroleum after costs have been recovered, and conversely if not so abundant, the government takes less.”
Soma has spent $40 million on seismic surveys of 60,000 sq km off the Somali coast, according to the company’s website. In November, Sheppard said the company would give the government its processed seismic data by “late this year, early next year.”
The data will be transferred to the Petroleum Ministry by the end of the second quarter, Sheppard said this week.
5/28/2015
ILYA GRIDNEFF
NAIROBI (Bloomberg) -- Soma Oil & Gas Holdings Ltd., chaired by former U.K. Conservative Party leader Michael Howard, has proposed a deal with the Somali government that may grant it as much as 90% of the country’s prospective oil revenue.
A draft production-sharing agreement, obtained by Bloomberg from an official close to the negotiations, sets the state’s share of revenue on the first 25,000 bopd at 10% if found at a depth of greater than 1,000 m and when oil costs less than $70 a barrel. If output exceeds 150,000 bbl, Somalia’s take rises to 30%. Crude for delivery in June fell 0.4 percent to $57.30/bbl at 4:45 p.m. in London on Thursday.
Any deal with Somalia will include terms that are “fair and balanced” and reflect those signed in other high-risk, offshore oil and gas jurisdictions, Chief Executive Officer Robert Sheppard said in an e-mailed response to questions on May 27. “The proposals being discussed are in line with current industry standards.”
Somalia is trying to attract investors to help rebuild its economy after African Union-backed government forces regained control of parts of its central and southern region seized by al-Shabaab in an insurgency that began in 2006. The Horn of Africa nation is scheduled to hold a general election in 2016, the first since 1967, according to the Heritage Institute, a Mogadishu-based research organization.
Oil and gas output may start by 2020 after exploration work showed the potential for “huge” offshore deposits, former Petroleum Minister Da’ud Mohamed Omar said in February.
Production Model
The government is drafting a production-sharing-agreement model before signing any deals, the Petroleum Ministry said April 20. “Nothing has been signed and there are no developments,” Fatima Mohamed, personal assistant to Petroleum Minister Mohamed Moktar Ibrahim, said by phone on May 25 after being asked to comment on the Soma proposal.
The draft agreement calls for the London-based company to be granted a four-year royalty holiday for oil and gas found less than 1,000 m below the sea surface. Deeper finds should carry a six-year moratorium, the document shows. Soma also requested a moratorium on taxes for at least 10 years.
Johnny West, founder of Berlin-based OpenOil, the world’s largest public online database of oil contracts, compared the terms of the Soma PSA to nine “early-stage” offshore African contracts, including post-war Liberia, that have potentially high costs, high exploration risk and various degrees of political risk.
‘Significant’ Deferment
“None of them defer significant revenue streams to the government for as long as Soma,” he said. “The next lowest cap on upside to the government of a mega-find is effectively 60% of profit, half as much again as in the Soma deal,” he said in a phone interview.
Soma proposes that if oil prices are at $70 to $150/bbl, the company receives 70% of revenue for the first 25,000 bbl and 50% on production in excess of 150,000 bopd. The company also offers the government 50% for the first 25,000 barrels and 30% for production above 150,000 bbl if oil rises above $150/bbl -- which would be a record high.
“Normally, fiscal and commercial terms for petroleum exploration, development and production are carefully crafted by the host government to balance the perceived petroleum prospectivity of a region,” said Michael McWalter, an international oil and gas specialist and former adviser to the Ghanaian government. “If oil and gas are abundant, the government takes a greater percentage of the net value of the petroleum after costs have been recovered, and conversely if not so abundant, the government takes less.”
Soma has spent $40 million on seismic surveys of 60,000 sq km off the Somali coast, according to the company’s website. In November, Sheppard said the company would give the government its processed seismic data by “late this year, early next year.”
The data will be transferred to the Petroleum Ministry by the end of the second quarter, Sheppard said this week.
Lord Flacko
VIP
lol Somalia is near dead last in that list though
Before anything else Somalia needs to set up legal frameworks and resource sharing agreements that are fair or we'll just go back to even worse civil war. I feel outside forces don't want Somalia to get into the oil and gas market. The corruption that was mentioned had no evidence to be based on and an investigation has found SomaOil not guilty. It was just a way to slow things down for us and get SomaOil broke and eventually leave.
http://www.telegraph.co.uk/business/2016/12/14/sfo-abandons-somali-corruption-probe-soma-oil-gas/
http://www.telegraph.co.uk/business/2016/12/14/sfo-abandons-somali-corruption-probe-soma-oil-gas/
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