THE OIL FACTOR IN SOMALIA
FOUR AMERICAN PETROLEUM GIANTS HAD AGREEMENTS WITH THE AFRICAN NATION BEFORE
ITS CIVIL WAR BEGAN. THEY COULD REAP BIG REWARDS IF PEACE IS RESTORED
By MARK FINEMAN
January 18, 1993
http://www.netnomad.com/fineman.html
Copyright 1993 The Times Mirror Company,
Los Angeles Times
DATELINE: MOGADISHU, Somalia
Far beneath the surface of the tragic drama of Somalia, four major U.S. oil
companies are quietly sitting on a prospective fortune in exclusive
concessions to explore and exploit tens of millions of acres of the Somali
countryside.
That land, in the opinion of geologists and industry sources, could yield
significant amounts of oil and natural gas if the U.S.-led military mission
can restore peace to the impoverished East African nation.
According to documents obtained by The Times, nearly two-thirds of Somalia
was allocated to the American oil giants Conoco, Amoco, Chevron and Phillips
in the final years before Somalia's pro-U.S. President Mohamed Siad Barre
was overthrown and the nation plunged into chaos in January, 1991. Industry
sources said the companies holding the rights to the most promising
concessions are hoping that the Bush Administration's decision to send U.S.
troops to safeguard aid shipments to Somalia will also help protect their
multimillion-dollar investments there.
Officially, the Administration and the State Department insist that the U.S.
military mission in Somalia is strictly humanitarian. Oil industry spokesmen
dismissed as "absurd" and "nonsense" allegations by aid experts, veteran
East Africa analysts and several prominent Somalis that President Bush, a
former Texas oilman, was moved to act in Somalia, at least in part, by the
U.S. corporate oil stake.
But corporate and scientific documents disclosed that the American companies
are well positioned to pursue Somalia's most promising potential oil
reserves the moment the nation is pacified. And the State Department and
U.S. military officials acknowledge that one of those oil companies has done
more than simply sit back and hope for pece.
Conoco Inc., the only major multinational corporation to mantain a
functioning office in Mogadishu throughout the past two years of nationwide
anarchy, has been directly involved in the U.S. government's role in the
U.N.-sponsored humanitarian military effort.
Conoco, whose tireless exploration efforts in north-central Somalia
reportedly had yielded the most encouraging prospects just before Siad
Barre's fall, permitted its Mogadishu corporate compound to be transformed
into a de facto American embassy a few days before the U.S. Marines landed
in the capital, with Bush's special envoy using it as his temporary
headquarters. In addition, the president of the company's subsidiary in
Somalia won high official praise for serving as the government's volunteer
"facilitator" during the months before and during the U.S. intervention.
Describing the arrangement as "a business relationship," an official
spokesman for the Houston-based parent corporation of Conoco Somalia Ltd.
said the U.S. government was paying rental for its use of the compound, and
he insisted that Conoco was proud of resident general manager Raymond
Marchand's contribution to the U.S.-led humanitarian effort.
John Geybauer, spokesman for Conoco Oil in Houston, said the company was
acting as "a good corporate citizen and neighbor" in granting the U.S.
government's request to be allowed to rent the compound. The U.S. Embassy
and most other buildings and residential compounds here in the capital were
rendered unusable by vandalism and fierce artillery duels during the clan
wars that have consumed Somalia and starved its people.
In its in-house magazine last month, Conoco reprinted excerpts from a letter
of commendation for Marchand written by U.S. Marine Brig. Gen. Frank
Libutti, who has been acting as military aide to U.S. envoy Robert B.
Oakley. In the letter, Libutti praised the oil official for his role in the
initial operation to land Marines on Mogadishu's beaches in December, and
the general concluded, "Without Raymond's courageous contributions and
selfless service, the operation would have failed."
But the close relationship between Conoco and the U.S. intervention force
has left many Somalis and foreign development experts deeply troubled by the
blurry line between the U.S. government and the large oil company, leading
many to liken the Somalia operation to a miniature version of Operation
Desert Storm, the U.S.-led military effort in January, 1991, to drive Iraq
from Kuwait and, more broadly, safeguard the world's largest oil reserves.
"They sent all the wrong signals when Oakley moved into the Conoco
compound," said one expert on Somalia who worked with one of the four major
companies as they intensified their exploration efforts in the country in
the late 1980s.
"It's left everyone thinking the big question here isn't famine relief but
oil -- whether the oil concessions granted under Siad Barre will be
transferred if and when peace is restored," the expert said. "It's
potentially worth billions of dollars, and believe me, that's what the whole
game is starting to look like."
Although most oil experts outside Somalia laugh at the suggestion that the
nation ever could rank among the world's major oil producers -- and most
maintain that the international aid mission is intended simply to feed
Somalia's starving masses -- no one doubts that there is oil in Somalia. The
only question: How much?
"It's there. There's no doubt there's oil there," said Thomas E. O'Connor,
the principal petroleum engineer for the World Bank, who headed an in-depth,
three-year study of oil prospects in the Gulf of Aden off Somalia's northern
coast.
"You don't know until you study a lot further just how much is there,"
O'Connor said. "But it has commercial potential. It's got high potential . .
. once the Somalis get their act together."
O'Connor, a professional geologist, based his conclusion on the findings of
some of the world's top petroleum geologists. In a 1991 World
Bank-coordinated study, intended to encourage private investment in the
petroleum potential of eight African nations, the geologists put Somalia and
Sudan at the top of the list of prospective commercial oil producers.
Presenting their results during a three-day conference in London in
September, 1991, two of those geologists, an American and an Egyptian,
reported that an analysis of nine exploratory wells drilled in Somalia
indicated that the region is "situated within the oil window, and thus (is)
highly prospective for gas and oil." A report by a third geologist, Z. R.
Beydoun, said offshore sites possess "the geological parameters conducive to
the generation, expulsion and trapping of significant amounts of oil and
gas."
Beydoun, who now works for Marathon Oil in London, cautioned in a recent
interview that on the basis of his findings alone, "you cannot say there
definitely is oil," but he added: "The different ingredients for generation
of oil are there. The question is whether the oil generated there has been
trapped or whether it dispersed or evaporated."
Beginni 1986, Conoco, along with Amoco, Chevron, Phillips and, briefly,
Shell all sought and obtained exploration licenses for northern Somalia from
Siad Barre's government. Somalia was soon carved up into concessional blocs,
with Conoco, Amoco and Chevron winning the right to explore and exploit the
most promising ones.
The companies' interest in Somalia clearly predated the World Bank study. It
was grounded in the findings of another, highly successful exploration
effort by the Texas-based Hunt Oil Corp. across the Gulf of Aden in the
Arabian Peninsula nation of Yemen, where geologists disclosed in the
mid-1980s that the estimated 1 billion barrels of Yemeni oil reserves were
part of a great underground rift, or valley, that arced into and across
northern Somalia.
Hunt's Yemeni operation, which is now yielding nearly 200,000 barrels of oil
a day, and its implications for the entire region were not lost on then-Vice
President George Bush.
In fact, Bush witnessed it firsthand in April, 1986, when he officially
dedicated Hunt's new $18-million refinery near the ancient Yemeni town of
Marib. In remarks during the event, Bush emphasized the critical value of
supporting U.S. corporate efforts to develop and safeguard potential oil
reserves in the region.
In his speech, Bush stressed "the growing strategic importance to the West
of developing crude oil sources in the region away from the Strait of
Hormuz," according to a report three weeks later in the authoritative Middle
East Economic Survey.
Bush's reference was to the geographical choke point that controls access to
the Persian Gulf and its vast oil reserves. It came at the end of a 10-day
Middle East tour in which the vice president drew fire for appearing to
advocate higher oil and gasoline prices.
"Throughout the course of his 17,000-mile trip, Bush suggested continued low
(oil) prices would jeopardize a domestic oil industry 'vital to the national
security interests of the United States,' which was interpreted at home and
abroad as a sign the onetime oil driller from Texas was coming to the aid of
his former associates," United Press International reported from Washington
the day after Bush dedicated Hunt's Yemen refinery.
No such criticism accompanied Bush's decision late last year to send more
than 20,000 U.S. troops to Somalia, widely applauded as a bold and costly
step to save an estimated 2 million Somalis from starvation by opening up
relief supply lines and pacifying the famine-struck nation.
But since the U.S. intervention began, neither the Bush Administration nor
any of the oil companies that had been active in Somalia up until the civil
war broke out in early 1991 have commented publicly on Somalia's potential
for oil and natural gas production. Even in private, veteran oil company
exploration experts played down any possible connection between the
Administration's move into Somalia and the corporate concessions at stake.
"In the oil world, Somalia is a fringe exploration area," said one Conoco
executive who asked not to be named. "They've overexaggerated it," he said
of the geologists' optimism about the prospective oil reserves there. And as
for Washington's motives in Somalia, he brushed aside criticisms that have
been voiced quietly in Mogadishu, saying, "With America, there is a genuine
humanitarian streak in us . . . that many other countries and cultures
cannot understand."
But the same source added that Conoco's decision to maintain its
headquarters in the Somali capital even after it pulled out the last of its
major equipment in the spring of 1992 was certainly not a humanitarian one.
And he confirmed that the company, which has explored Somalia in three major
phases beginning in 1952, had achieved "very good oil shows" -- industry
terminology for an exploration phase that often precedes a major
discovery -- just before the war broke out.
"We had these very good shows," he said. "We were pleased. That's why Conoco
stayed on. . . . The people in Houston are convinced there's oil there."
Indeed, the same Conoco World article that praised Conoco's general manager
in Somalia for his role in the humanitarian effort quoted Marchand as
saying, "We stayed because of Somalia's potential for the company and to
protect our assets."
Marchand, a French citizen who came to Somalia from Chad after a civil war
forced Conoco to suspend operations there, explained the role played by his
firm in helping set up the U.S.-led pacification mission in Mogadishu.
"When the State Department asked Conoco management for assistance, I was
glad to use the company's influence in Somalia for the success of this
mission," he said in the magazine article. "I just treated it like a company
operation -- like moving a rig. I did it for this operation because the
(U.S.) officials weren't familiar with the environment."
Marchand and his company were clearly familiar with the anarchy into which
Somalia has descended over the past two years -- a nation with no
functioning government, no utilities and few roads, a place ruled loosely by
regional warlords.
Of the four U.S. companies holding the Siad Barre-era oil concessions,
Conoco is believed to be the only one that negotiated what spokesman
Geybauer called "a standstill agreement" with an interim government set up
by one of Mogadishu's two principal warlords, Ali Mahdi Mohamed. Industry
sources said the other U.S. companies with contracts in Somalia cited "force
majeure" (superior power), a legal term asserting that they were forced by
the war to abandon their exploration efforts and would return as soon as
peace is restored.
"It's going to be very interesting to see whether these agreements are still
good," said Mohamed Jirdeh, a prominent Somali businessman in Mogadishu who
is familiar with the oil-concession agreements. "Whatever Siad did, all
those records and contracts, all disappeared after he fled. . . . And this
period has brought with it a deep change of our society.
"Our country is now very weak, and, of course, the American oil companies
are very strong. This has to be handled very diplomatically, and I think the
American government must move out of the oil business, or at least make
clear that there is a definite line separating the two, if they want to
maintain a long-term relationship here."
Fineman, Times bureau chief in Nicosia, Cyprus, was recently in Somalia.
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