Soma Oil writes to UNSC as Somali President calls for review of government contracts

THE EMBATTLED oil explorer, Soma Oil and Gas whose dealings with Somalia has been subject of investigations in the UK has sought audience with the UN Security Council following adverse mention in a leaked UN report.

In a letter  dated August 17, 2015 to the UN Security Council Chair  Rafael Dario Ramirez Carren, former Tory leader and Chairman of Soma Oil Lord Howard has refuted claims by the UN Monitoring Group for Somalia and Eritrea noting that the Group ‘ has fundamentally misunderstood the nature, purpose and destination of payments under the terms of the CBA signed by Soma and the Federal Government.

“Soma is gravely concerned that the serious allegations against the Company may stem from a basic misunderstanding of the CBA and the oil industry,” said Howard.

Review contracts

Somali President Hassan Sheikh Mohamud yesterday called for a review of all contracts signed by the government to ensure they are in conformity with the law and best practices. “I Would like to direct the Financial Management Committee (..) to review the contracts in accordance with the laws of the country, any contract that doesn’t meet the law should be scrapped,” said Mohamud.

Soma Oil has insisted in past rebuttals to the report that the Capacity Building Agreement it signed with Somalia was transparent and did not at any given point amount to conflict of interest as alleged in the report.

“Soma is gravely concerned that the serious allegations against the Company may stem from a basic misunderstanding of the CBA and the oil industry,” Howard.

The oil explorer added that it was normal practice for oil companies to provide capacity support especially to emerging oil countries which may lack such capacity. “It is entirely commonplace for countries to request oil and gas companies or other institutions to support capacity building in early stage oil and gas jurisdictions,” read the letter.

IOCs

Soma said contrary to claims in the report that its dealings with the government locked out other international oil companies, IOCs, to bid for oil blocks in Somalia, its engagement with the Federal Government of Somalia had indeed led to opening up of Somalia and even motivated IOCs to come back to the country.

“When the Federal Government decided to resume exploration activity and open up the country’s hydrocarbon industry, there were twelve international oil companies (“IOCs”) that had declared force majeure over their Somali licences as a result of the civil war.  These IOCs were resisting requests to return to the country to explore for hydrocarbons. In contrast, Soma was willing to engage with the Federal Government to open up Somalia’s oil and gas industry and demonstrate that it was possible to operate successfully in the country,” Soma said.

Disappointing

Soma Oil Chief Executive Officer, Robert Sheppard on his part castigated the move by the Monitoring Group to leak out the report to the media since the report itself was incomplete in a note on Soma website.

“It is disappointing the Monitoring Group chose to leak its draft report which includes a recommendation for an oil moratorium in the country whilst its own investigation, as it states, remains incomplete and is in our view, inaccurate,” said Sheppard.

Sheppard added the mention of Somali government employees exposed them to danger.”Furthermore, as a group mandated with reporting on security issues in the country, it is concerning that it would leak a report to the media which discloses the names of Ministry employees that may now be subject to targeting by militant, anti-government insurgents,” noted Sheppard.

Conflict of interest

In its findings, which Goobjoog News has reviewed and extensively reported on, the Monitoring Group has detailed what it terms as a collusion between Ministry of Petroleum officials and Soma Oil to engage in corrupt practices.

It mentions for instance the Capacity Building Agreement as a quid pro quo arrangement in which case the Ministry was to shield Soma Oil from any questioning. In the agreement, the Monitoring Group raises concerns about conflicts of interest since some of the people hired in the agreement were already serving in government and ended up drawing double salaries.

The Group has also questioned the nature and transparency of the seismic survey agreements calling for a moratorium until Somalia develops sufficient legal instruments which can enable it enter into such agreements.

In the letter, Howard has asked the UNSC a meeting to ‘answer these allegations and to begin a dialogue to ascertain how our investment and commitment to the country can be further leveraged, through collaboration with the UN, to maximise the positive social and economic impact of Soma’s work in-country’.