Even if Somalia is at present not the best place where to do business, as it is torn by civil war and with a government supported only by Ethiopian troops, it has nevertheless drawn the attention of energy pioneers. The ever-present Chinese oil companies are leading the race for Somali oil, but there are also Australians and an African new entry. In the last four years they have signed exploration contracts with the authorities of Somaliland and Puntland. This shows how the hunger for oil cannot even be stopped by war.

Somalia. Oil companies’ interest in Somalia is not new: already in the '80s energy giants like Shell, Conoco, Chevron and Eni carried out explorations in the African country, but they had to flee the country in 1991 as soon as civil war broke out. Since then, and until 2003, no oil company had the courage to reenter a country without a recognised government and that was in the hands of the lords of war. Until price and the international demand for oil rendered desirable even high-risk countries.

Somaliland. Somaliland declared its own independence in 1991, but has not been recognised by the international community. In 2003 Somaliland signed an exploration contract with the Australian company Ophir Energy, 50 per cent of which is controlled by South-African Mvelaphanda Holdings. Ophir obtained an exploration licence that covers more than 14,000 square km, but the details of this licence have not been disclosed. According to the company’s chairman, Alan Stein – who was interviewed by o PeaceReporter - in spite of a few preliminary studies, there is still a long way to go: there isn’t even a reliable estimate of the resources that can be exploited.

Besides the issue regarding the actual presence of oilfields (which is highly probable since the coasts of Somalia and Yemen - where oil has already been found – have the same geological configuration), what is really upsetting is the international status of this region. Even if Somaliland is more stable and developed than its “mother country”, until now neither the “African Union” nor the United Nations have recognised the status of independent republic to this territory. What would happen if (for now this is just a remote possibility) Somalia was finally pacified and decided to claim its sovereignty on the region, thus invalidating the contracts signed by Hargeisa’s government? Stein preferred not to answer this, declaring only that “the company has started a political analysis of the situation”.

Puntland. The situation of Puntland is even more complex. Puntland is an autonomous region, “de facto” separated from Somalia after the beginning of the civil war. In the last two years the authorities of the region have signed two exploration contracts with a Chinese consortium, made up of Cnooc and China International Oil and Gas, along with the Australian Range Resources. This news has not been welcomed by the Somalian government: President Abdulahi Yusuf, born in Puntland, authorised the agreement, but premier Mohammed Ghedi has informed that a new law on oil concessions is being approved. According to this law all the contracts previously signed should be renegotiated.

Moreover, there’s the issue of the contracts signed after the fall of Siad Barre’s regime in 1991. Range Resources’ website informs that the company asked legal counselling on this matter. According to experts since Somalia hasn’t had a recognised government for 14 years, previous contracts are not valid “de facto”. The issue, however, is still controversial: two international economic law’s experts, interviewed by PeaceReporter, have not been able to give a definite answer.

Unknown future. In spite of all the political and legal uncertainties, the rush for oil will not stop, also because small companies often invest in high-risk countries as their only chance of gaining a place among the giants of energy. And maybe, when the situation in Somalia will be stabilized, they could resell them those very concessions at a higher rate. Unlikely as it may seem, it is not impossible and energy pioneers know it well.