Nairobi, 19 Dec 2007 - The Somali state of Puntland has created a new oil ministry, the government said Tuesday, after foreign companies clamoured to explore the resource in the region believed to sitting on hydrocarbons.

The president of semi-autonomous Puntland, Mohamud Musse Hersi, named Hassan Osman Mohamud as the new minister for oil and minerals when he appointed a new governnment on Sunday, Information Minister Abdirahman Mohamed Bankah said.

"That is a new ministry that will oversee that sector," he told AFP.

Several other companies including China's CNOOC and China International Oil and Gas (CIOG) are reported to have signed agreements with Puntland, which was controlled by Abdullahi Yusuf Ahmed before he became president of Somalia in 2004.

Last month, Canada's Africa Oil delegation visited the region to brief leaders on its planned oil exploration activities for next year.

In 2005, a small Perth company, Range Resources Limited, signed a mysterious deal with the Somali government for exclusive mineral and oil rights over a large slice of the country, sparking a stand-off between Yusuf and former prime minister Ali Mohamed Gedi who quit in October.

The Horn of Africa nation, which has had no functioning central government since 1991, and where Puntland has set itself up as a self-governing entity, has attracted several foreign energy companies that are interested in prospecting for oil.

Before the country plunged into anarchy in 1991, when dictator Mohamed Siad Barre was ousted, geological exploration indicated that Somalia could have oil reserves given its proximity to the oil-rich Red Sea and Gulf of Aden.

Thus, large oil companies were awarded acreage in the 1980s but have yet to return owing to years of bloody clan feuds, and most recently, insurgency by an Islamist movement ousted from control of a large part of Somalia with the help of Ethiopian troops.

A scramble for resources has fueled the complex Somali conflict that has defied numerous bids to restore a functional national administration.

Early this year, Somalia's parliament enacted a petroleum law, which provided for a production-sharing agreement that requires firms to share their profit with the government after they recover their costs.

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