Somalia Letter Said Total SA Oil Deal Illegal

LONDON, Nov 20, 2007 – Somalia has deemed a Total SA (TOT) oil exploration contract in the country illegal but has proposed negotiations for a new deal, according to a letter obtained by Dow Jones Newswires. "The exploration agreement signed in between Total and the Transitional National Government (a previous interim government) cannot be considered as valid" because "the TNG was already overthrown by the war lords" when it was signed, said the letter, signed by Ali Mohamed Gedi, then prime minister of Somalia who resigned last month.

The letter, sent in February and titled "appointment with Total's representatives," was sent to Axis Associes SA, a consultancy advising Somalia in the talks with the French oil major.

The letter said Gedi's government was "ready to renegotiate with Total Company a new agreement for exploration and block sharing."

Gedi's personal assistant, Axis Associes and Total declined to comment.

The French oil company has previously said it is betting Africa's oil reserves will save it from decline and help it top rivals' production growth.

Total signed its initial deal, a technical agreement to conduct seismic work offshore, in 2001. But it said earlier this year that the security and political situation has so far prevented the company from implementing the contract.

Gedi resigned last month from his position after a long feud with the country's president Abdillahi Yusuf Ahmed. Gedi's successor has yet to be appointed and it is unclear what his position would be on the Total deal.

Source: Dow Jones Newswires