Oil deals from Dec 1990-Sept 2012 invalid- Petroleum Bill

By T. Roble

Oil contracts entered into between December 1990 and September 2012 are invalid and the Government of Somalia is not liable for any compensation, the Petroleum Bill recently passed by the Lower House states.

The Bill which now heads to the Senate for further debate cushions Somali government from any liabilities or claims by international oil companies which signed deals either with the national government or regions within the timeframe.

“All petroleum agreements signed with administrations in parts of Somalia, or the Transitional Federal Institutions from December 1990 to September 2012, are invalid,” article 9 (1) of the Bill reads.

The law which aims to regulate the exploitation of oil resources in the country, however, acknowledges the validity of contracts entered into before 1990. The pre-1991 oil companies most of which declared Force Majeure can seek to renegotiate their contracts with the Federal Government.

PRE-1991 CONTRACTS

According to the Bill which is an amendment of the 2008 Petroleum Law, pre-1991 companies wishing to return must provide a true copy of the previous agreement, satisfactorily prove that the contract happened before December 30, 1990 and that it complied with the obligations of the contract.

They must also provide a copy of the work record in accordance with the agreement and all information specified in the contract which ought to have been submitted to the government.

An agreement that has a Concession award for the former contractor to carry out the Petroleum Operations will be replaced by a Production Sharing Component (PSA), article 10 of the Bill reads.

FORFEIT CLAIMS

Should the Senate endorse the Bill and particularly these provisions, companies which entered into contracts after collapsing of government in January 1991 until the end of the Transitional Federal Government in 2012 will have no recourse but to forfeit any claims thereof.

In 2005, Puntland signed off its first oil exploration contract with Australian company Range Resources and subsequently a Production Sharing Agreement in 2007 with Range Resources and its partner Canmex Minerals subsidiary Canmex Holdings (Bermuda).

Liberty Petroleum, a US based company signed an oil deal with then Galmudug state led by current Senator Abdi Awale Qeybdid but this was contested by the Dutch-British oil Giant Shell which had been granted rights in the area prior to 1991.

Tembo Petroleum which has since dissolved according to the UK’s Companies House is reported to have negotiated an oil deal with TFG president Sheikh Sharif in Jubbaland.