We will offer our full cooperation to SFO, says Petroleum Minister
THE SOMALI GOVERNMENT has said it will offer its full cooperation to the UK’s Serious Fraud Office, SFO, over investigations on the oil company Soma Oil and Gas should it be requested even as critics demand all oil contracts in the country be nullified.
In a statement to the media Monday, the Ministry of Petroleum and Mineral Resources also said it was standing by its earlier agreement with the oil company over the Capacity Building Support signed in April 25, 2014.
SOA terms
In the Seismic Option Agreement, SOA , Soma agrees to pay the salary costs of up to a maximum of six months consultants and advisors such salary in each case not to exceed $5,000 per month for each person over a period of 12 month period starting from the date agreed between the two parties.
Soma Oil, according to the SOA was also tasked with paying the cost of equipment, transportation and other working tools needed which shall not exceed lump sum of $4,000.
“Though the SFO has confirmed that no suspicion attaches to Lord Howard, a member of the UK House of Lords, who is also the non executive director of the company, there are allegations that his influence may have had a hand in winning the contract.’
The government on its part was to provide monthly written reports to Soma in relation to the Capacity Support Salaries detailing the names of all staff to be covered in the agreement, functions and terms of reference besides the duration of appointment. A copy of the contract of employment for each such proposed member of staff was to be provided by the government as part of the agreement.
Corruption allegations
It is this agreement and the general oil exploration agreement that has got the SFO and the UN Monitoring Group on Somalia and Eritrea, asking questions. The Monitoring Group says the deal had never been made public, nor was it approved by the Federal Parliament of Somalia.
The SFO said Friday it is probing the London-based company, along with Soma Oil & Gas Holdings Ltd., Soma Management Ltd. and other in “relation to allegations of corruption in Somalia.
But the Somali government has always maintained the transactions were above board and confirmed the same Friday.
“If the (investigation) outcome is positive – nothing wrong – then the Soma Oil and Somali government relationship and cooperation will continue. If there is any wrongdoing (proven), then that’s another case,” said the Ministry of Petroleum
National interests
In its response today to the corruption allegations, the Ministry stated the exploitation of the resources was in the interest of the country.
“Somalia’s oil and gas reserves are a national asset to be used and exploited in the national interest and we are committed to achieving this with complete integrity and transparency,” read the statement in part.
An oil industry forum, The East African Energy Forum (EAEF) has lent its credence to the investigations calling for the termination of all contracts on all resource deals in Somalia until proper transparency and anti-corruption laws are passed in the country as advised by the UN.
EAEF, which had warned the government in 2013 against the agreement said it was reading a conspiracy between the UK government and the government of Somalia over the matter.
“Has the UK come to Somalia so that is can facilitate its companies in plundering Somalia’s resources? Were the London conferences and renewed British interest in Somalia just a cover for business interests? I don’t think so, but they need to come out in opposition of this kind of behavior from UK based companies,” said EAEF in a statement yesterday.
Seismic surveys
Soma says it has spent $40 million on seismic surveys of at least 60,000 square kilometers (23,166 square miles) off the Somali coast. The company has proposed a deal with the Somali government that may grant it as much as 90 percent of the country’s prospective oil revenue.
The company said part of the cost would be used to digitalise old seismic information and collect new offshore data.
Though the SFO has confirmed that no suspicion attaches to Lord Howard, a member of the UK House of Lords, who is also the non executive director of the company, there are allegations that his influence may have had a hand in winning the contract.
This argument, which has been canvassed by critics who allude to the manner in which the company won the contract yet it was barely four months old into the industry. However, then minister of Petroleum Abdirizak Omar Mohamed in a September 20, 2013 response to the concerns said Soma will subcontract the deal to a reputable seismic company.
“Soma has agreed in the SOA that both it and its subcontractors “shall act as a reasonable and prudent operator in accordance with the highest standards in the international petroleum industry and the guidelines and manuals of the International Association of Geophysical Contractors (IAGC),” said Mohamed.
Timelines
In a statement on its website dated June 3, 2015, Soma Oil and Gas notes that it will hand over seismic data to the government of Somalia on August 1, 2015.
“Soma Oil & Gas remains on track with the transfer of the processed seismic data to the Ministry of Petroleum & Mineral Resources (the “Ministry”). It is currently anticipated that Soma Oil & Gas will complete such transfer by 1 August 2015, the second anniversary of the signing of the Company’s Seismic Option Agreement (“SOA”),” says Soma.
It further notes that it has so far invested over US$40 million on the Exploration Programme, more than double the required spend under the terms of the SOA. However Soma says there is no Production Sharing Agreements (“PSAs”) with Somalia yet but looks forward to it once the federal government completes the interim revenue sharing agreement with the regional authorities.