Congratulations, You Won!!!

by Bilan A. Aden
Monday, January 30, 2012

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You know when you get that annoying pop up after you open a web browser saying “Congratulations You Won!!!”? We all know that it's a hoax and there really isn't anything to win, just a bunch of false ads about subscribing to some random products or services. This is how I feel about the new Puntland oil discoveries. Let me give you a little background on the key player. We have the Austrailian exploration and production company called Range Resources. The firm's website click here, mentioned that they have found two hydrocarbon basins covering approximately 20 million acres in Puntland, Somalia.

It was also mentioned in a web video by Al Jazeera, that these blocks could potentially produce about 19 billion barrels of oil in the Puntland region. That’s about 2 trillion dollars of commerciable oil. When the firm's executive Director, Peter Landau, was asked on Al Jazeera how the profits will be split, this is how he broke it down:
Without mentioning any details, monthly payment installments will be given to the local government of Puntland during exploration. A range of 4%-12% of royalties, based on daily production, will go to the government. Lastly, profits will be split 50/50 between the local government and Range Resources.

President Abdirahman Farole of Puntland: Hoax to impress the world and lure big oil companies

After listening to the interview, I immediately had many concerns about this venture. Questions that I believe should have been asked, were overlooked in this short interview. When it comes to production, who determines the cost and under what economy, the Australian or the Puntland region? When that has been determined, who will oversee the minimum cost? Usually, these companies make huge profits by taking advantage of poor countries, and in this case a region where one man controls, the President of Puntland and Australian citizen, Abdurahman Farole.

The astonishing thing is that a small unknown company is informing the whole world that they are going to explore oil in Puntland, while the renown companies like Sinclair Oil Corp., Rodgers Oil Company, and Conoco Oil Company, who have been exploring Somali oil since the 40s, are not in the frontlines of this oil business.

This seems like a hoax to impress the world and lure big oil companies to buy them out, which is another cost added to the future of Somalia's oil business. Furthermore, to make this project seem legitimate, a few pictures where taken of the two areas with equipment staging a lucrative “come buy me” position. Excuse me? Last I checked, technology is so advanced that finding oil takes minimum effort by simply pointing a satellite. It looks to me that they are trying to gas up the hype.

My Last but certainly not least question is how and who will oversee the environmental impact of this oil? Certainly the local government has not established a organized environmental protection agency. The threat of a catastrophic oil spill can be very dangerous to human, animal, and plant life.

We all witnessed the oil spill in 2010 in the Gulf of Mexico, eleven crew members died during the explosion and it took more than 80 days to contain the spill. It cost British Petroleum Billions of dollars in clean-up cost and fines mandated by the government. Their effort to contain the oil leaks were due to the demand and outrage of the US government and it’s citizens. I don’t know who will have Puntland’s back if there is such a disaster. Furothermore extracting commerciable oil in a foreign country requires:
1. A recognized government, which can negotiate on behalf of it's people and environment.
2. A recognized elected Parliament, which represents the people of the land that can rectify the deals and contracts between the government and oil companies.
3. Huge Investment, which requires a peaceful country with a recognized government that can sign deals on behalf of it's people
4. Banks which are recognized by IMF and International Banks, to be able to conduct financial transactions and L/C (letter of credit)
5. Infrastructure and strong educated labor force.

Puntland and Somalia as a whole are lacking all these requirements, therefore no genuine company will consider spending a dollar to explore oil in Somalia. If anything, it all sounds like we have a scam on our hands folks and we cannot afford to fall for it.

Bilan A. Aden
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