Open Letter to: Honourable Abdirahman Mohamed Abdullahi, MP, Speaker of House of Representatives

Re: Exposing the Plot of the Minister of Mineral & Water Resources and Rova Energy Corporation Limited to Plunder Hydrocarbon Resources of Somaliland

Dear Mr. Speaker,

Recently we came across a press conference and a press release given by the Hon. Qasim Sheikh Yusuf Ibrahim, the Minister of Mineral & Water Resources ( MWR), and the director of a fake company called Rova Energy Corporation Limited (REC), Mr. Andy Chakrabarti, dated 18 July, 2006, concerning a secret agreement they signed with TGS. These press releases were full of inaccuracies, distortion, lies and slanderous statements which show their incompetence, deception and fraudulent activities. We are deeply alarmed and gravely concerned by the unfolding scandals that the government orchestrated in order to plunder the resources of the country. We are worried about the catastrophic impact that this may cause to the potential oil wealth that could be the main source of income as well as a great source for development and growth of the country. We are, therefore, compelled to comment upon some of the statements they have made by fulfilling our obligation as citizens of this country, with the intention of protecting and safeguarding the natural resources of the country, from fake companies like REC and mercenary government officials, as stated in Article 12 (2) of the Somaliland's constitution.

" The care and safeguarding of property (public), endowments and public assets is the responsibility of the state and all citizens."

In this letter we will expose the deception and lack of transparency of the Minister of MWR and REC who conspired to plunder the hydrocarbon resources of the country. It is not the first time that we have exposed REC, but what surprised and shocked us was the level of corruption in the government, the extent of support that this fake company has from the government, and the degree of deception employed by the Minister. Furthermore, this is not the first time that the Minister has authorized dubious agreements in secrecy. For the past two years he signed numerous secret dealings including the agreement he signed with another Indian businessman on March 2006 who was awarded to Block 32, Berbera Block. It is clear that none of these companies have a track record as oil explorers or producers. All of this indicates that these individuals plotted to pilfer the petroleum resources of the country without anyone noticing. This is a disgrace!

The simple method which we have adopted in exposing the Minister and his associates, as well as REC, as it is apparent in the previous letters to the President, is to quote their claims, taken from the conference and press releases, and then to refute each claim in turn.

Before commencing, we would like to make the following clarifications:

We have forwarded two letters dated 29 July, 2005 and 9 December, 2005 to President Dahir Riyale Kahin (attached). In these letters we have exposed the bogus company of REC and its dishonest directors. As a result we recommended the government to immediately terminate the illegitimate agreement it had with REC and to investigate REC and the corrupt government officials who authorised the agreement, and to bring them to justice.

However, our expectations were dashed. Nothing has been done either to terminate the illegal agreement or even to reply to our letters and the letters and emails sent by many fellow Somalilanders living inside and outside the country, to the President's office and to the MWMR’s office to stop this scandal. It appears that all correspondence has fallen on deaf ears. Worse was to come. Our dismay is heightened by the fact that the President seems to have endorsed the activities of these criminals. The President has issued a decree allowing this fictitious company and its directors to freely operate in the country and to hold on to the most prospective hydrocarbon province of the country, without any scrutiny as claimed by Mr. Chakrabarti on his recent press release. This proves that the government has no interest in protecting the natural resources of the country . Furthermore, the pattern of secret agreements with unknown and fake companies, by the government suggests a tendency towards bribery of influential individuals within the government in the secret corners of the government departments.

This is contrary to Article 12 (4) of the Somaliland's constitution which states that:

"The central state is responsible for the natural resources of the country, and shall take all possible steps to explore and exploit all these resources which are available in the nation’s land or sea."  

Previous letters which we sent to the President exposed this fictitious company and its directors (attached). Here we will highlight a few important issues:

After we exposed the reality of REC and its directors, Mr. Chakrabarti tried to hide the truth by changing the co-director and the secretary of the company. In the latest Annual Return to the Companies House, which he submitted on 18 October, 2005 (attached), he removed Amina CHAKRABARTI as the secretary and Jawahir CHAKRABARTI as the director of the company. He also altered the registered address of the company. However, the total nominal value of issued shares remains £100, and the shareholders are the same individuals who are Dr. (?) Jawahir ALI, Dr. (?) Jawahir Mohamed ALI, Mr. Ananda Kumar CHAKRABARTI, Mr. Anandar Kumar CHAKRABARTI, and Westmont Offshore HK Ltd. Let us see what other sham that Mr. Chakrabarti will present for the next Annual Return which is due on 18 October, 2006.

From the attached documents and the above account it is clear that REC is a fake company that has no income to conduct exploration activities in the country. It was solely established with the intention to filch the hydrocarbon resources of the country, as was admitted by Mr. Chakrabarti (see the letters sent to the President). We, therefore, believe that it is trying to take advantage of the situation of the country in an attempt to achieve its goals.

The government has secretly signed a Production Sharing Agreement (PSA) with REC on 27 April, 2003 for the sole and exclusive right to conduct petroleum operations including exploration, appraisal, development and production in Blocks 35, 36, M10 and M10A(1)(a huge acreage from east of Berbera to the border with Puntland, offshore and onshore, see the attached map). These blocks are the most prospective hydrocarbon province of the country.

The agreement should have expired on 26 April 2004, after the end of the Initial Exploration Period. We believe under the PSA, REC has no further rights in the contract area.

The former director and shareholder of REC, Mrs. Jawahir Mohamed Ali Sheikh Madar is one of the closest diplomats to the President. She is the Somaliland presidential envoy for business coordination as well as the Somaliland representative to Sub-Saharan Africa and Malaysia. Therefore, it is not surprising that a special decree was issued by the President to allow REC to keep the huge concession , although it was in breach of its agreement with the government. This is clearly a conflict of interest.

“The government signed a long term agreement with TGS-NOPEC to carry out non-exclusive seismic surveys offshore. This includes the marketing of new and legacy data as well.”

Further elaborating upon this agreement the Minister told the reporter, Barry Morgan, of Upstream Magazine which was published on 28 April, 2006 that the:

"Contracts are set for signature this week for non-exclusive 2D seismic sweep over unallocated offshore blocks, along with an aeromagnetic survey of onshore acreage"

The Minister continued "We have a data-sharing agreement in place and, after cost recovery; all profits will come to Hargeisa."

As clearly noted above, the Minister signed a non-exclusive(2) geophysical data survey agreement with TGS(3) (see the attached map). The Minister clearly stated that the contract of the 2-D non-exclusive seismic survey covers only the unallocated offshore blocks. This means that it does not include Blocks M-10 and M-10A, since these blocks were awarded to REC. It only covers Block M-11 (between Zaila and Berbera). It is, therefore, clear that this contract has nothing to do with REC. Non-exclusive contracts are designed, as explained in the footnote, to attract E & P companies by acquiring non-exclusive geophysical data in an open acreage, in which the E & P companies can then buy licenses of the data in fraction of the cost of the data. In Somaliland, the government has awarded all the offshore blocks, except Block M-11, to REC. Furthermore, what is unclear about this contract is the ownership of the data and the percentage of the profit that the government will receive.

Further exposing the deception of the Minister and REC we declare: 

In reference to the Minister's statement:

“Shirkadda TGS iyo shirkadda Rova Energy heshiiska ka dhexeeya iyaguu u gaar yahay.”

"The agreement between TGS and Rova Energy is exclusive to them."

Without a doubt this is a calculated deception. It is shocking and revealing to see that the Minister is claiming that REC and TGS have an agreement, without the involvement of the government. This is a scandal. As explained in the previous section and quoted from his statements, the Minister has indeed signed an agreement with TGS. One may wonder why the Minister is denying this agreement, unless he is attempting to conceal some kind of fraudulent activities, including the commissions they obtained from the contract, as admitted to us by one of his associates. Does the Minister see the irony? Shame on you!

In a further blow to his denial, REC confessed that the Ministry had an agreement with TGS. In a statement released by Mr. Chakrabarti, REC stated that :

“Waxaan aaminsanahay in heshiiska dhawaan ay kala saxeexdeen Wasaarada Macdanta iyo Biyaha Somaliland, Rova Energy iyo Shirkada reer Norway ee magaceeda la yidhaahdo TGS uu yahay mid faa’iido u soo kordhindoona Somaliland”.

"We believe the recently signed agreement between Somaliland’s Ministry of Mineral & Water & Resources, Rover Energy and the Norwegian Company by the name of TGS is one that will bring benefits to Somaliland"

Contrary to Mr. Chakrabarti’s claims, the agreements that the Minister signed with his fictitious company, and other companies, are not well thought-out agreements, and the benefits reach only the concerned companies and inner circle of the government.

In reference to the Minister's statements: 

"Anaguna doorka aanu ku lahayn waxa weeye inaanu isku soo dhawayno, isku keeno oo aanu heshiiya nidhaahno.”

“Our role was to bring the two sides together and mediate between them in order to come to an agreement."

"Waxaanu ku guulaysanay inaanu xafiiskeenii London iskugu keeno "

"We have succeeded in bringing them together in our London office."

"Inaanu isku keeno oo aan ogaano oo weliba markhaati ka ahaano annagaa ka shaqaynay.”

"To bring them together and to know and bear witness was what we have worked hard for."

The calamities continue.

This is another illustration of the deception of the Minister and his lack of understanding of his duties. It also proves that the Minister is not in a position to protect the interests of the country; rather he prefers to act as a broker between different companies. This is a d isgrace !

The Minister forgets that his duty is to take care of the interests of the country, and not to mediate between different companies whose aim is to get maximum profit for their shareholders. Furthermore, in the process of being a broker, he has neglected his other duty, the most important element for the survival of our people, ‘water’ which comes under his ministerial responsibilities.

In reference to the Minister's statement: 

" TGS mashruuceeda iyadaa soo qiimaysanaysa wuxuu ku kacayo, shirkadda kalena iyadaa la gorgortamaysa, ilaa saacaddaa aynu imika joogno anigu heshiiska waxa ay ku heshiiyeen qiimihiisu inta uu yahay ma ogi ilaa hadda, laakiin waxaan ogahay inay heshiiyeen uun.”

“TGS would set its budgets for the project and the other company (REC) would negotiate with them, up to this hour I have NO idea the value of the project, but I know they have agreed."

 This is an illustration of the confusion and deception surrounding the Minister. It is appalling to note that the miscreants of REC negotiated with TGS on behalf of the government. Worse still, the Minister claims that he is unaware of what the contract entails and the cost of the contract itself . This is something implausible. The Minister is either so confused that he is unaware of his own speech, or he is trying to deceive us. It should be noted that one of his cronies has offered to us to send the contract.

Worse still, the Minister is falsely claiming that that the contract is between the REC and the TGS . However, as explained above, this is not the case. It, therefore, seems that either his Ministry is run by crooks such as the director of REC or he is telling the public an utterly fabricated lie. The Minister should know that his main duty is to guard the interests of the country, as stated in Article 12 (2) of the Somaliland's constitution:

" The care and safeguarding of property (public), endowments and public assets is the responsibility of the state and all citizens."

In reference to the Minister's statements: 

“Shirkadii markaa sahaminaysay ee heshiiska nala gashay hawlaha jira iyo khatarta jirta inay cid la kaashato, laba sannadood baanu hawshaas ka shaqaynaynay.

"The company that was exploring and had an agreement with us, to cooperate with others in order to find what is in there and the risks involve, we were working on this task for two years."

 "TGS baa ogolaatay shuruudihii aanu doonaynayna noo ogolaatay, heshiiska laba sannadood ka hor baanu galnay,”

“TGS agreed to our conditions and we entered into this agreement two years ago.

The Minister's position is inconsistent. In the above statements the Minister admits that for the past two years he was working for REC to plunder the hydrocarbon resources of the country. Furthermore, the main reason for taking part in the international conferences, such as the meeting that the Minister's cronies attended in Houston, and the AAPG conference that is to be held in Perth on November 2006, is to persuade companies to buy a stake of the huge concession given to REC by our government. It should be noted that the expenses incurred by all of these meetings is covered by REC as admitted by one of the Minister's associates.

The Minister also admitted to the reporter of Upstream Magazine, that he will be travelling to London, Houston and Perth for the purpose of helping REC to sell the concession. The Minister stated:

"We hope to arrange a road-show in London, Houston and perhaps Perth within 12 months."

As noted above, the Minister has sided with the criminals of REC and it seems that he in fact works for REC in order to get his share of the commission that they may receive once they sell the concession.

In reference to the Minister's statement: 

"Rova iyadaa u baahan in macluumaadka loo sameeyo, tana (TGS) waa tii macluumaadka (data) qaadaysay "

“Rova needs data to be conducted, and this (TGS) is the one that will acquire the data”

Here we find clear evidence of the Minister’s deception. REC was awarded four blocks on 27 April, 2003 . Since that date it has carried out no exploration activities. This is not surprising as it is incapable of doing so. Furthermore, contrary to the false claims of the Minister, TGS agreement with the government (not with REC) covers unallocated offshore blocks as has been explained above.

In addition, the Minister clearly believes that REC owns the data that TGS will acquire. It should be noted that TGS cannot have a non-exclusive agreement with REC, unless it was led to believe that REC runs the Ministry or it is the national oil company of the country.  

In reference to the Minister's statements: 

“ Shirkadda kale waxa weeye Rova Energy oo aanu ku heshiinay inay qoddo dhulka, waxay ku qodaysaana waxa weeye macluumaadka ay tani soo saarto.”

“The other company is Rova Energy, we have agreed with them to drill for hydrocarbons, it will drill using the data acquired by this (i.e. TGS)

“Rova shaqadeedu waxay ku xidhan tahay sahamintan.”

"Rova’s work is dependendant on this survey"

Without a doubt this is a fabrication. As we have clearly shown from the previous letters, REC has no capabilities to explore the contract area. It is a broker attempting to obtain wealth easily. In addition, the Minister is again deceiving the public by saying that TGS will carry out data gathering for REC.

In reference to the Minister's statement: 

“Adduunka maanta korkiisa aynu joogno, saddex shirkaddood baa sahaminta u sameeyo oo ugu waaweyn, … haddii aad magacyadooda doonaysaana waan idiin sheegayaa, waxa la yidhaahdaa Fugro, waxa la yidhaahdaa PGS, waxa la yidhaahdaa TGS. "

"Over the world, three companies are able to acquire hydrocarbon survey data and are the biggest; if you want to know their names I can tell you, their names are Fugro, PGS and TGS."

This is a clear example showing the level of the intellectual ability of the Minister. We wonder what kind of criteria he used to have made such a statement. The following geophysical contractors are active on the seismic market: WesternGeco (24%), CGG (17%), PGS (14%), Veritas DGC (11%), BGP (6%) and Fugro (6%). The percentages in the bracket indicate their market share.

From above list it is clear that the largest seismic contractor is WesternGeco, followed by CGG. TGS is not included in the above list because it is a small player which has insignificant seismic market share.

In reference to the Minister's statements: 

" Qodistu waxay bilaabmaysaa marka macluumaadka sahamintu uu dhammaado ee la process-gareeyo, ee la enterprise-gareeyo, ee shirkaddaasi cayinto meesha ay qodayso."

"Drilling will begin once the survey has been conducted, the data has been processed and interpreted, and the company has located the potential drilling locations."

When asked, “When, 2050?” The Minister replied "Ma sheegi karo anigu." "I cannot say".

The Minister continued to say:

" Labada shirkadood weli sahamintii iyo macluumaad ururintii may qaadin."

"The two companies have not yet conducted a survey nor have they gathered data."

"Barnaamijka shirkaddu hawshu inta ay ugu qabsoomayso marka ay noo soo gudbiso ayaanu daba gelaynaa "

"When we obtain details of their program and timescale we will follow-up"

This is another example of the Minister's deception. The Minister admits that REC has done no exploration activities (for the last three and half years). This further proves that it is a broker who is awaiting the right moment to sell the concession. Contrary to the Minister's statements, the exact dates in which the drilling should have started were stated in the PSA between the government and the REC.

Let us glance at what is in the PSA between the government and REC which was signed on 27 April, 2003 .

Article 1.3 of the Agreement states that:

"During the term of this Agreement, the Contractor (i.e. REC) shall perform all of the Petroleum Operations directly or through Subcontractors"

Article 4.4 explains the duration of the Agreement. The Article states:

"The Exploration Period shall commence on the Effective Date and unless this Agreement is sooner terminated in accordance which its terms, shall continue:

(a) for an initial exploration period of twelve (12) months ("Initial Exploration Period"."

Further, Article 5.2 gives details of work and expenditure obligations during exploration period. The Article states:

" (i) During the Initial Exploration Period, the Contractor shall conduct the following exploration work programme:

A. Review, reprocess and reinterpret existing seismic data;

B. Define drilling location(s) and logistical programmes for one or more wells.

The Minimum Expenditure for this period shall be Five hundred thousand US dollars (US$ 500,000).

(ii) During the Second Exploration Period, the contractor shall conduct the following exploration work programme:

Drill (1) Exploration Well to a depth which extends to:

The total Minimum Expenditure for this period shall be two million US dollars (US$2,000,000).

(iii) During the Third Exploration Period, the Contractor shall conduct the following exploration work programme:

Drill one (1) to two (2) Exploration Well(s) to a depth which extends to:

The total Minimum Expenditure for this period shall be three million US dollars (US$3,000,000).

(iii) During the Fourth Exploration Period, the Contractor shall conduct the following exploration work programme:

Drill two (2) to four (4) Exploration Well(s) to a depth which extends to:

The total Minimum Expenditure for this period shall be four million US dollars (US$4,000,000).”

As we have demonstrated in the previous letters, REC has failed to complete all of the above exploration work programmes. Furthermore, REC admits that it is has conducted no exploration activities since signing the agreement with the government. In a statement released by Mr. Chakrabarti, REC stated that: 

“Rova Energy laftooduba waxay xogta la ururiyo uga faa’iideysandoontaa sugitaanka sahaminta badhtilmaameedka u cayiman inay saliid ka qodo”

"Rova Energy would make use of the data to be gathered, to locate potential drilling positions."

“….Hawshaasi oo aanu ku rajowaynahay inay bilaabmato dabayaaqada 2007”.

"We are optimistic that we will begin towards the end of the year 2007"

The above statements clearly show that REC has conducted no exploration activities. It also demonstrates that it has no intention to carryout exploration activities until the end of the year 2007, presumably waiting for someone to buy the blocks before that date. One wonders how it can retain the huge concession it possesses. Furthermore, the statements prove that REC is incapable of doing any exploration activities on its own. Given that it has the exclusive rights to explore, appraise, develop and produce the concession, it should either collect its own data or ask for exclusive geophysical surveys from geophysical contractors, instead of feigning that it is part of the agreement between the government and TGS. 

In reference to the statement of Mr. Chakrabarti: 

“Mucaawinada wasaarada la siiyey waa arrin aanu isla gofraynay anaga iyo mas’uuliyiinta wasaaradu ”

"The financial assistance provided to the Ministry is a matter negotiated between us and the officials in the Ministry."

Giving financial assistance to the Ministry was not included in the PSA as we explained in the previous letters. We can, therefore, imagine what REC means by financial assistance knowing their past conducts and ways in which the Minister permitted REC to go to the second phase of exploration, without fulfilling the requirements of the Initial Exploration Period. Furthermore, everyone who works in the Ministry, except the Minister and his cronies, confirm that REC did not provide any support for training and professional development. It is, therefore, clear who are the beneficiaries of the financial assistance given by REC as claimed by Mr. Chakrabarti.

This is not the first time that REC admitted bribing the government. REC confessed giving the government $500,000 in secret, before the approval of the PSA by the Council of Ministers, as we revealed in the previous letters to the President (attached).

In reference to the statement of Mr. Chakrabarti: 

“Waxaase jirtey in Rova Energy ay iyadu ka codsatay Wasaarada in loo fududeeyo si ay u dhaqaajin lahayd hawsha. Taas oo keentay in si ku meel gaadh ah uu Madaxweynaha Somaliland Mudane Daahir Riyaale Kaahin u soo saaro dictator Rova Energy loogu fududeenaayo hawsha”.

"Rover Energy has requested leverage from their contractual agreement to initiate their programs of work with ease, a request submitted to the Ministry. This has prompted the President of Somaliland Dahir Riyale Kahin to temporarily release a diktat ordering ‘the work of Rova to be made easier’."

If this is correct, then it is truly shameful to our country. How could the President allow felons like this individual to enter the Second Phase of Exploration while they were clearly in breach of the Agreement? Moreover, we are greatly disturbed by this decree as it presents the lack of commitment of the government to protect the resources of its country. Furthermore, it illustrates that the government is involved in this fraudulent activity at its highest level. We can, now, understand why REC gave financial assistance that was not included in the Agreement, to the Ministry.

In addition, what does the President mean by “the work of Rova to be made easier"? Does this mean that the government allowed it to keep the four blocks without any scrutiny, even though it is in breach of its obligation under the Agreement as along as it gives financial assistance to the government? This is a scandal!

Recommendations

This is the state and condition of the government and of the REC. In the above account we have presented a glimpse of how deceptive they are. Much more than that can be said, however, this is not the time and the place, since this disclosure was intended to be brief and concise, with the aim of exposing the Minister and REC.

For the reasons outlined above and the revelations presented in the attached documents(4) we urge you as a Speaker of the House of Representatives to investigate this scandal and to speak out and call upon the President to immediately end this scandal. We do not believe that the House can remain silent in the face of such a scandal. We, therefore, urge you not to approve any dubious agreements that the government has signed with fictitious and unknown companies, since it is the duty of the House to ratify such agreements as it is stated in Article 53 (3) of the Somaliland's constitution:

"The House of Representatives shall ratify international agreements (treaties) such as political, economic and security agreements …."

We also urge you to fully investigate this scandal by summoning and interrogating the Minister and other government officials who are involved in this scandal, given that it is your duty to question the Ministers and other government officials as stated in Article 53 (7) of the Somaliland's constitution:

"The Committees of the House of Representatives shall have the power to question Ministers, Heads of the state organs or agencies or other senior national officers, whose duties are relevant to them, about the fulfilment of their duties"

We sincerely hope that you will show courage and leadership in investigating this scandal. To do otherwise would be to fail to uphold the House's responsibility to care for the interests of the country and to protect the natural resources of the country.

Finally, we would like to stress that we have no political motivation at all; our interest is purely to safeguard the natural resources of the country(5). Furthermore, we have invested a great deal of effort in researching and attempting to comprehend the geology and hydrocarbon potentials of the country. We attend conferences and publish papers in peer-review journals for the sole purpose of promoting the hydrocarbon potential of Somaliland in an attempt to persuade major and genuine oil companies to return to the country.

We look forward to your response to this very urgent matter.

Yours Sincerely,

Mohammed Yusuf Ali, BSc, MSc, PGCE, FGS, Ph.D.
Ahmed Ali, BEng (hons), MSc, DIC, Ph.D.(6)

Cc. Hon. Saleban Mohamed Adan, Chairman of House of Elders (Golaha Guurtida)

__________________________________________________________________

Footnotes:

(1) REC claims that, after discussion with MWR, it redefined the concession and focuses its exploration activities on the western region covering Blocks 35 and M10A.

(2) A non-exclusive geophysical data is data that is acquired over an area at the expense of its owner for the purpose of sale to aid in oil exploration. Geophysical companies normally own the data. They sell the data multiple times, each time at a fraction of the acquisition cost to recover the cost of the acquisition and processing of the data. Host countries normally get a percentage of the profit.

(3) TGS is a small seismic specialist company and as far as we know it has no capabilities to conduct land seismic, aeromagnetic and aerogravity surveys.

(4) The supporting documentation we have attached to this letter; which is by no means a comprehensive sampling of relevant issues, include:

(5) Word of warning: Anyone who attempts to plunder the natural resources of our country should note that we will not be tricked by their deception. They should know that we will spare no effort in protecting and safeguarding our resources and we will expose any dubious agreements that mercenary government officials may award to fraudulent companies.

(6) For questions and further details about this issue please feel free to contact:

Dr. Mohammed Ali E-mail: mali@pi.ac.ae
Dr. Ahmed Ali E-mail: drcalikeli@yahoo.com