Four years after Somaliland opened its doors to oil and gas exploration with its first licensing round, this self-proclaimed nation still works to overcome perception. But the tide appears to be changing. Investors, for the most part, have been steering clear of Somaliland, which split from Somalia but is still not recognized as a country due to security concerns. Who could blame investors? Violence in nearby Somalia, the site of Islamic militant operations, has not ceased. Just last week 28 people reportedly died after a Shabab militant group attacked a police station north of Mogadishu, according to The New York Times. Government officials from countries across the globe are still warning their citizens to avoid the area. Earlier this year, British officials warned its citizens to leave Somaliland after learning a terrorist organization threatened to kidnap foreigners in Hargeisa. The US Department of State continues to warn US citizens not to travel to the area. Every year since 2008, there have been violent kidnappings and assassinations of both local and foreign staff working for international organizations, the state department said on its website. But it noted “Somaliland has experienced a level of stability that has not been present in other parts of Somalia.” Violent attacks don’t happen in Somaliland as often as they do in Somalia. In a profile on Somaliland, BBC reported that “the former British protectorate has also escaped much of the chaos and violence that plague Somalia, although attacks on Western aid workers in 2003 raised fears that Islamic militants in the territory were targeting foreigners.” Leaders in Somaliland continue to distance themselves from Somalia as they seek to earn recognition as a country. Although poverty and unemployment are widespread, the news outlet called Somaliland’s private business sector “thriving.” And good news could be on the horizon. Energy Minister Hussein Abdi Dualeh told Bloomberg that Somaliland anticipates signing an oil exploration deal with an international energy company this week. If the agreement goes through as planned, it would be the fourth for Somaliland. Others operating in the area are Genel Energy, RAK Gas, and DNO International. The region’s energy potential is too good for some to pass up. There are signs of onshore oil seeps, and “geological data showing favorable conditions for hydrocarbons to have accumulated in numerous large tilted fault blocks and sub-basins,” Genel said on its website. “In addition, the basins of Somaliland were contiguous to Yemen prior to the opening of the Gulf of Aden in the Oligocene-Miocene – similar sedimentary sequences and structural styles are expected in Somaliland.” The company is targeting resources of more than 1,000 MMbbl in blocks SL-10B and SL-13, and more than 1,000 MMbbl in the Odewayne block. Security concerns halted seismic operations this year, but Bloomberg reported the Somaliland government assessed the threat and Genel plans to resume its operations, which should be finished by year-end 2014. Somaliand’s story sounds similar to that of Kurdistan. Perhaps Somaliland can learn lessons from the Middle Eastern region when it comes to growing its oil and gas sector. Although Kurdistan still has some challenges, the region has attracted some of the world’s top oil and gas companies despite opposition from the Iraqi government. Contact the author, Velda Addison, at vaddison@hartenergy.com.
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