A new law signed by Somalia’s President Mohamed Abdullahi Farmaajo that gives the central government powers to sell the country’s oil blocks for commercial drilling and giving his administration full control of the unexploited crude deposits has caused unease within the Kenyan government.
The new Petroleum Act paves the way for creation of a state-owned oil company with authority to sign exploration deals with foreign entities that have been lining up for the country’s more than 200 petroleum blocks.
The law also raises a new dimension in the ongoing maritime dispute between Kenya and Somalia, as it unlocks Mogadishu’s powers to potentially sell oil blocks that are in the disputed area of the Indian Ocean waters.
A ruling on the case filed before the International Court of Justice is expected in July.
The new Act dissolves all agreements entered into between Somalia and outside entities between 1991 and 2012. It also states that deals entered into with Somalia before Siad Barre was ousted will be retained, though these may need to be updated.
Somalia’s 202 oil blocks are said to hold over a billion barrels of oil. Fifteen of those blocks could be ready for extraction. But four of those are in a disputed area where Somalia is contesting a maritime boundary with Kenya.
Revoke existing pacts
A Kenyan diplomatic officials who spoke off the record said they will be watching to see if any of those blocks in the disputed area are affected by the expected public auctions.
As it is, the law gives the federal government exclusive rights to enter petroleum exploration and extraction agreements with foreign entities. This means that Mogadishu could now revoke agreements entered into by federal states as long as the federal government does not endorse them. (