Somali PM 'Unaware' Of Chinese Oil Deal

By Barney Jopson in Nairobi

Nairobi, Kenya, July 17 2007 – Somalia’s interim prime minister has sought to distance himself from a decision to grant oil exploration rights to CNOOC, indicating that the Chinese state oil giant may have become entangled in an internal power struggle within the interim government.

CNOOC and a smaller group, China International Oil and Gas, are planning to begin survey work in the Puntland province later this year - the latest example of China's willingness to brave Africa's most volatile regions in search of natural resources.

But Ali Mohamed Gedi, prime minister, told the Financial Times he had not seen the agreement granting the Chinese groups exploration rights. "I'm not aware of this. I don't know anything about it," he said in an interview in Nairobi.

He added that no valid deals could be struck until the country's interim parliament had endorsed a new oil law due to be published in the next two months.

The FT, however, has seen a document signed by president Abdillahi Yusuf Ahmed, who is from Puntland, that granted two Somali officials power of attorney to sign a production-sharing agreement with CNOOC Africa and CIOG in Beijing on May 24 last year. At the time, the transitional government had little authority outside its base in Baidoa.

Last month Somalia's energy minister met with the heads of CNOOC Africa and CIOG in Nairobi to hammer out the details of their planned survey work.

One western diplomat who follows Somalia said it would be no surprise to find the president and prime minister working independently of each other. "They don't really get on. They're from different clans," he said. "They have differences and divergences, but they tolerate each other."

CNOOC in Beijing last week declined to comment on any aspect of the deal over exploration rights.

Mr Gedi yesterday emphasized the importance of putting a national oil law in place. "There are many companies interested in exploring oil and gas in Somalia, but in order to protect the wealth of the country and the interests of the Somali people, we cannot operate without a regulatory body, without rules and regulations," he said.

An official record of last month's Nairobi meeting between the transitional federal government (TFG) and the Chinese groups says: "The TFG has and will continue to authorize CNOOC and CIOG to exercise their contract without any interruption during and after the effectiveness of the new national oil law."

Mr Gedi said he was aware of "informal contacts" between his government and oil companies, including Chinese groups and some of the western oil groups that held exploration concessions in the 1980s.

Asked how oil groups would feel about one of their rivals striking a deal ahead of the oil law, he said: "Life is up and down. Today yes, tomorrow no. Tomorrow yes, the day after, no. But I believe those who are interested in the oil business in Somalia will be received after the petrol law is endorsed by parliament."

In the late 1980s exploration concessions were held by companies including Conoco and Phillips, which have merged; Amoco, now part of BP; and Chevron. These groups left the country after dictator Mohamed Siad Barre was overthrown during civil war in 1991.

Source: The Financial Times

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