Breakaway Somalia State Plans Privately Funded Force to Guard Oil Companies' Operations
By JUSTIN SCHECK
LONDON—A United Nations group
expressed concern this week about plans by a breakaway Somalia state to create
a privately funded security force to guard oil companies' operations, according
to an internal U.N. document reviewed by The Wall Street Journal.
Companies including Norway's DNO
International AS DNO.OS +5.87% A and Genel
Energy GENL.LN +0.69% PLC—a small British company headed by Tony Hayward , BPBP.LN +0.37% PLC's ex-chief executive and the current
chairman of mining giantGlencore GLNCY +1.01% PLC—have signed deals with the government
of the state of Somaliland to explore for oil. Somalia's Mogadishu-based
central government says the deals are invalid on the grounds that regional
governments like Somaliland's have no authority to sign such agreements.
In a May 27 letter to a
U.N. Security Council committee on Somalia, the U.N.'s Somalia and Eritrea
Monitoring Group said Somaliland's government has exhibited "poor
transparency" in reporting the money that it has received from oil
companies and "weak regulation" in its process for forming an armed
force to guard oil companies' exploration operations.
"That is hogwash to
say there is no transparency," Somaliland Resources Minister Hussein Abdi
Dualeh said Friday in an interview. He said the government has published the
signing fees it collected over the past year or so, including $750,000 from DNO
and $1.8 million from a Yemeni firm. The security force, he said, would be
headed by the state's interior ministry. The interior minister didn't return
messages Friday.
A DNO spokesman didn't
return messages Friday. A spokesman for Genel said the company supports the
creation of an oil-protection force in Somaliland.
The breakaway state has
been trying for several years to develop a local oil industry. Somaliland has
long been more stable and peaceful than the rest of the country, and its
officials have chafed at being controlled by the nation's Mogadishu-based
government, which has focused on tamping down terrorist groups in recent
months.
Several small,
risk-happy oil companies have looked to Somaliland as a promising frontier,
striking deals to explore areas that big oil companies had exploration leases
on dating back to the 1980s. While some of those companies have objected to the
overlapping leases, the small firms moved ahead with their projects. But in
September, Genel suspended its operations due to a security threat.
Since then, Somaliland's
government has hired at least two private companies to prepare reports on how
the country could develop an oil-protection force, including one paid for by
Genel, the UN letter says.
The most recent report,
which Somaliland officials say they are following, suggests Somaliland create a
force that is "government-owned but commercially operated," and
staffed by 580 members of the Somaliland police force and army, the U.N.
group's letter says. The Journal hasn't reviewed that report, but Somaliland
officials have confirmed its content.
The force would have
startup funding from an outside group—possibly a commercial investor or
humanitarian fund—and have its operations paid for by oil companies operating
in the country, the letter said.
The monitoring group
said that without protections, that plan could make Somaliland's government
"vulnerable to undue influence" from private companies or lenders
backing the oil-protection force.
To avoid violating a
U.N. arms embargo, the letter said, Somaliland would have to get support for
its plan by a U.N. member state to request an exemption from the embargo. It is
unclear whether the U.N. Security Council would grant such an exemption.
The Somalia monitoring
group's coordinator, Jarat Chopra, declined to comment Friday, as did a
representative of the U.N.'s Somalia committee. Mr. Dualeh, the Somaliland
resources minister, said his government hasn't begun the process of seeking an
exemption from the arms embargo.
Write to Justin Scheck at justin.scheck@wsj.com
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