Somalia’s Oil and Gas Potential, A frontier country that will be open for oil and gas exploration in 2013!

  Friday December 28, 2012 TWITTER FACEBOOK PRINT THIS PAGE SEND TO YOUR FRIEND  
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Somalia: High hopes to generate revenues from hydrocarbons:

At the moment, Somalia intends to move forward and give hope to its citizens. In order to do that, it must earn revenue to provide the basics: build sustainable peace, improve security for everyone in Somalia and provide public services: education, health, sanitation, access to clean water and build infrastructure. Resources that can generate revenue include the development of livestock, fishery, agricultural products, minerals, oil and gas in addition to collecting taxes from property, income, payroll or workforce, corporate, capital gains, wealth, goods and services (value added tax [VAT]) and many other types of taxes.


Somalia has high hopes in gaining revenue from oil and gas, currently hidden in the underground of Somalia (onshore) and below the Indian Ocean-floor (the offshore). More than two decades ago (in the eighties), there was an “oil and gas exploration rush” to Somalia, driven by the country’s huge oil and gas potential. The rush was led by Conoco-Phillips, Shell (Pectin), Amoco, Eni, Total and Texaco, who left the country in “force majeure” waiting to come back at the right time, security wise. In a recent meeting, the Minister of Resources said, “Given that the security condition of the country is improving at a rapid speed and the presence of legitimate transparent government, companies of the past and the new ones are all welcome. Somalia will be open for business sometime in 2013 and we honour the agreements of the companies who filed “force majeure” and left the country due to the civil war. We are now working to review the Petroleum Law and make it more competitive and attractive to oil companies and investors”.Somalia is aware of the recent discoveries in Kenya, Uganda, Tanzania and Mozambique and it is determined to join the race for oil and gas production. In addition to the “giant” oil companies, currently there are small companies who are aggressive risk-takers who want to start and get hold of their share before the giants come to play. The “giant oil companies” seem to be reluctant and shuffling their feet at the moment. In getting ready for business, Somalia needs to carry out institution building: establish the Somali Petroleum Authority (SPA) in accordance to Article 8 of the Petroleum Law of Somalia. SPA is the competent authority that regulates petroleum operations in Somalia by ensuring that all activities from exploration, production and marketing adhere to the requirements of the Petroleum Law. Somali Petroleum Corporation (SPC) exists already but it may need re-structuring so that it meets the high expectations of the current government.


Exploration activities in East Africa and Offshore Indian Ocean:


In the surrounding countries of Kenya, and Uganda petroleum was discovered by small and medium companies. An example is the recent discoveries of Tullow Oil Plc. in Uganda and Kenya. Recently, Kenya has awarded licences to companies capable of working in deep-sea offshore blocks though that had triggered anger from the Somali side. Shell, Anadarko and Eni are not only the major Western oil and gas companies operating in East Africa offshore. For example, UK gas major BG Group is active in Kenya and Tanzania. BG Group entered Kenya in 2011, acquiring an interest in two offshore exploration blocks: L10A and L10B in the south of the Lamu Embayment.In Ethiopia, Africa Oil Corp has completed farm-out agreement with New Age (African Global Energy Ltd) whereby New Age acquired an additional 25% interest in Africa’s Oil Blocks 7 and 8 in the Somali State of Ethiopia. Africa Oil Corp and Tullow Oil Plc. work together in South Omo concession.


The New Scramble for Deep-sea Offshore Indian Ocean:


Elsewhere in offshore Indian Ocean margin, in MozambiqueUS-based Anadarko Petroleum and the Italian oil and gas-company, Eni have both recently announced significant gas discoveries (giant gas fields) in their respective blocks in the Rovuma Delta. In Rovuma, Tanzania another gas discovery was announced by Tanzania’s Petroleum Development Corporation. The recent natural gas discoveries off the coast of Mozambique in the Indian Ocean are important because of the size of the reserves as well as the country’s relative proximity to markets in Asia. During the writing of this article, Statoil announced its third gas discovery in offshore Tanzania.


The bulk of the Indian Ocean margin lies within Somalia and whatever discovery happens there in the Indian Ocean alerts the ears of the Somalia’s Ministry of Resources. That is why Somalia aggressively wants to join the race for oil and gas discoveries of East and Horn of Africa. Now the name of the game in East Africa offshore is gas.Due to its geographic location, Somalia should look for markets and investors from the East. Countries such as Japan, India and China will be eager to consume Somalia’s oil and gas.


Historical background and starting afresh:


Somalia’s oil and gas potential was the driving force that has attracted oil exploration companies to hunt for oil and gas. About 60 years ago (in early 1950s) Agip (Italian) and Sinclair Oil Corporation (American) began to study the petroleum geology of Somalia and ever since companies flocked to Somalia whenever it was possible. Sinclair Oil Corporation drilled in the south more than 50 wells (some for stratigraphic and some for oil production purposes) worked from the mid-fifties to mid-sixties without a commercial oil discovery and Eni (previously known as Agip) worked from the fifties to the eighties and abandoned Block 31 (Puntland) in force majeure. Recently, during a visit to the well sites of Hobyo-1 and Gira-1 in Hobyo and Wisil respectively in Galmudug State of Somalia, it was not easy for me to understand why no exploration have not taken place in this area after October 1956. The top plug of the well has an inscription that says: “Obbia-1, October 1956.”


From 1960 to 1969 oil companies were slowly coming in to explore for oil and gas. However, on the 21stOctober 1969 a military regime came to power and announced Scientific Socialism as its ideology, joining Somalia to the Soviet Block during the Cold War. Thus Somalia became un-accessible until 1977 when Somalia invaded Ethiopia to reclaim “ Western Somalia”.Somalia was defeated and it turned to the West for friendship. In the eighties companies aggressively came back to carry out exploration. But in the eighties , political stability was slowly eroding away and security was gradually breaking down as the military regime grew more authoritarian using a single party system, incompetent, infected with clanism, nepotism and corruption. Most of the major clans were not satisfied and consequently established political movements to up-root the regime and ultimately on 26thJanuary 1991 it was overthrown.Later, the President of Somalia, Comrade Siyad Barre died in exile. Unfortunately Somalia entered the darkest ages of its life: lawlessness, anarchy and the absence of a central authority.


Wasn’t Somalia Drilled For Oil And Not Found?!


Exploration in Somali sedimentary basins:

#

Sedimentarybasins

Area in km²

Wells drilled

Drilling Density = Area/wells

1

The Lamu Embayment

35,000

3

11,666

2

Mandera – Luuq

40,000

4

10,000

3

The Somali coastal

50,000

13

3,846

4

Hiiraan Sub-basin

45,000

5

9,000

5

Galmudug basin

95,000

13

7,307

6

Nugaal Valley

60,000

8

7,500

7

Dharoor Valley

85,000

10

8,500

8

The Guban

35,000

7

5,000

8 basins

445,000

63 wells


N.BThe last two wells drilled in the Dharoor Valley of Puntland are included.

Wasn’t Somalia drilled for oil and gas and why new ventures now?

Petroleum exploration has extended over 60 years. The first exploratory well, the Sagaleh-1, was completed in 1956 and likewise Hobyo-1 was inscribed to have been finished in October 1956. As of the end of 2012, a total of 63 wells have been drilled. None of these wells has been commercially successful, although some have had hydrocarbon shows. The fundamental questions of finding oil in Somalia are all positive:

1.

Has oil been generated in the area? Yes.

·There are some large oil seeps in North Somalia (Somaliland) and in the Southwest where Ethiopia, Kenya and Somalia meet.

·In Sagaleh-1 of Agip (Puntland), oil staining was found in a porous limestone-dolomitic series of the Jurassic.

·Gira-1 of Sinclair (near Wisil in Galmudug) found a small oil show in the Jurassic

·In Cotton-1 of Agip, a good gas show was found at 91m of Cretaceous limestone.

·Auradu Paleocene limestones showed oil stains in the Sagaleh, Cotton and Gira wells.

·In Merca-1 shelf-limestones of Oligocene age of 792m showed no hydrocarbon traces but the Eocene sandstones in this well not only had good oil staining but contained gas under good pressure

·Afgoye-1 of Sinclair, north of Merca also had a good gas show.

·In Calub and Halala (Wardheer, Ethiopia), Tenneco Oil Corp discovered gas and these fields are not far from Galinsoor in Galmudug.

·Again Tenneco discovered a non-commercial oil in El Kuran near the Bakool border with Ethiopia.

2.

Are there suitable reservoir rocks? Yes.

-A reservoir rock has porosity and permeability. Porous sandstone and fractured limestone are good reservoir rocks.Porous dolomitic- limestone are plenty in the sedimentary sequence of Somalia. There also basal clastics that terminated in early Jurassic.

3.

Are there seals or cap rocks? Yes.

-Oil and gas accumulate only where seals occur above and around reservoir rocks so as to stop the upward migration of oil and gas and form traps.

4.

Are there suitable structures? Yes.

-Structural traps: These traps hold oil and gas because the earth has been bent or deformed. The trap may be simple. Also, there are stratigraphic traps


Eng. Abdulkadir Abiikar, London, UK

Kadir.abiikar@hotmail.co.uk

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