Puntland
Oil & Mining Deal: The Offspring of an Affair
between Greed and Incompetence (Part I)
By:Omar M. Abdi & Salah Fatah
Imagine a group of greedy businessmen and their
cohorts in a room with utterly incompetent representatives
of a government in desperate financial situation.
Throw in some cash in the mix and it is very
likely that you will end up with something similar
to the oil and mining exploration deal Puntland
authorities signed with Consort Private, a disturbingly
dubious company, with the consent and blessing
of the TFG administration.
The essence of the deal is as follows: the
regional administration of Puntland signed a
concession agreement with Consort Private Ltd
on August 30, 2005. The agreement gives Consort
Private Ltd the sole and exclusive rights to
all mineral and oil exploration, as well as
development on and offshore in an area of approximately
212,000 square kilometers in Puntland. Consort
Private sold 50.1% of their rights to Range
Resources Ltd, a small Australian firm, which
is trying to raise $3.45 million dollars to
fund the deal.
The deal was initially opposed by Somalia’s
TFG Prime Minister Mr. Geedi who raised strong
objections to the agreement in a letter to the
Australian Security Exchange (ASX). The letter
sparked a worry among investors who heavily
traded Range’s shares to the point where the
company requested ASX to remove its name from
the trading board temporarily. However, in a
mysterious turn of events, Mr. Geedi changed
his mind shortly after his initial opposition
and fully endorsed the deal. To this date, Mr.
Geedi has not been forthcoming in explaining
the rationale for his sudden change of heart.
Having successfully obtained the blessing of
Somalia’s TFG Range Resources Ltd announced,
on April 21, 2006, that it secured a letter
of intent from Korean National Oil Corporation
to buy exclusive rights to 75% of the land covered
by Range’s concession. If the deal with the
Korean company goes through, Range Resources
will receive US $10 million signing bonus, more
than twice the amount they plan to raise.
The Puntland oil and mining deal has been the
subject of intensive debate among Somalis and
has created tensions, particularly amongst the
founding groups of Puntland and its current
administration. The government’s action provoked
violent confrontations resulting in loss of
innocent lives in the areas targeted for initial
contract works, specifically Majayahan and Dhalan
in Sanaag Region.
There are many unanswered questions
about this deal:
- Do the TFG (a temporary care taker), much
less the regional administration of Puntland,
have the authority to sign an agreement with
far reaching consequences for the economic
outlook of the country for decades to come?
Shouldn’t this kind of decision be left to
a duly elected Federal Somali administration
and parliament after appropriate laws governing
the exploration and development of underground
resources are put in place?
- Why is the agreement between Puntland and
Consort Private Ltd. a tightly kept secret
that is forbidden to share with the Somali
public? Does the public have a right to know
what is in this agreement and demand that
it should be made public?
- Why were the negotiations of a deal of
this magnitude trusted in the hands of few
private individuals (the documents we found
contain at least one such name) who have no
knowledge and experience in oil and mining
negotiations and may be driven by personal
gain?
- Why did members of the Somali Federal parliament
and members of the Puntland parliament decide
to abandon their constitutional responsibility
to scrutinize and debate this serious matter?
Don’t they have an obligation to stand up
to the unconstitutional transgression and
breach of their authority by the executive
branches? Are they even aware they have role
in his matter?
- What is it that Prime Minister Geedi saw
in the deal that led to his strong objection
initially as reported by Australian newspapers?
More importantly, what changed his mind and
force him to flip-flop and endorse the deal
wholeheartedly?
- Why are the president and speaker of the
parliament silent about an issue that, if
allowed to go through, has the potential to
seal the fate of our resources for generations
to come? The Speaker’s silence is particularly
disturbing. It implies an endorsement for
agreement with Consort Private Ltd and Puntland
administration’s unprovoked attacks on innocent
citizens of the region.
- Given the failure of governments at all
levels, do the Somali people have an obligation
to intervene and do what is right for their
country?
Is this a good deal for the Somali people?
Obviously, we—the authors of this piece—do not
think so. Like many Somalis we’re suspicious
about the secrecy surrounding this agreement
and wanted to know more about it. With some
search on internet and help from friends we
were able to obtain substantial amount of publicly
available documents which shed strong light
on many aspects of this deal. These documents
include:
- The speech Puntland President gave at the
signing ceremony at Dubai Hilton.
- The speech Puntland finance minister gave
at the signing ceremony.
- Exclusive Rights to All Minerals in Puntland:
This document describes key highlights of
the agreement between Range Resources Ltd
and Consort Private Ltd and ontains detailed
information about the scope of the work and
financial compensation to Consort Private
and its partner, Puntland government.
- Copy of a letter from Puntland president
to Mr. Anthony Black, director of Consort
Private Ltd. The president reaffirms Puntland
administration’s commitment to deal following
a strong rejection by Prime Minister Geedi
days earlier.
- Copy of a letter from Prime Minister Geedi
to Puntland’s Vice President in which Mr.
Geedi expressed strong support for the agreement
with Consort Private Ltd.
Copy of a letter by the CEO of Range Resources
Ltd, Mr. Mike Povey to the Australian Stock
Exchange in which Mr. Povey announced his
firm’s intention to sell 75% of its rights
to Korean Nation Oil Corporation.
Unfortunately, we were unable to get hold of
the agreement between Puntland Administration
and Consort Private Ltd, but we will continue
our effort in that direction. It is ironic that
while the TFG and Puntland administrations were
covering their tracks with pathetic secrets,
their counterparts were making full disclosures
of the deal in order to attract investors around
world.
In the first installment of this two part article,
we will present the facts of the deal based
on the documents as well as other sources we
obtained. In part two, we share more documents
and present our take on why this deal is bad
for Somalia and for the people of Puntland in
particular.
Facts of Puntland Oil and Mining Deal:
Chronology of Events
August 30, 2005: Consort Private,
which is believed to be registered in the Maldives
and operates through a London law firm, signed
a contract with Puntland government at the Hilton
Hotel in Dubai. The content of the agreement
has not been made public yet. Individuals present
at the signing ceremony included Puntland’s
President, Mr. Mohamed Muse Hersi and his finance
minister both of whom gave speeches on the occasion.
Consort Private Ltd was represented by Mr. Anthony
Black, a London lawyer who is also the director
of the company.
President’s speech at the signing ceremony:
http://www.rangeresources.com.au/docs/The%20President%20speech%20on%
20the%20night%20of%20the%20signing.pdf
Finance
Minister’s speech at the signing ceremony:
http://www.rangeresources.com.au/docs/Ministers%20Speech.pdf
October
5, 2005: Range Resources Ltd, a small
Australian firm, announced that it had entered
into a conditional heads of agreement with an
overseas company, Consort Private Ltd, to buy
50.1 per cent of the sole and exclusive rights
to all mineral and oil exploration and development
in Puntland. Under the terms of the agreement,
Range Resources will pay Consort Private $US2.5
million and make a further 17 monthly payments
of $US 200,000. Consort will also be given 85
million Range Resources shares and 85 million
Range share options. It is not known how much
of these payments Consort will pass over to
Puntland government. However, an official document
produced by Range Resources and presented in
the company’s annual meeting on November 28,
2005 estimated Puntland royalty payments to
be 5 to 10 percent. We will present this document
in the second part of this article. Key highlights
of the agreement between Range Resources Ltd
and Consort Private Ltd is available at this
link: http://www.rangeresources.com.au/docs/267613.pdf
October
6, 2006: In a letter to the Australian
Stock Exchange (ASX), TFG Prime Minister Mr.
Geedi strongly objected to the agreement between
Range Resources Ltd and Consort Private. The
letter obtained by The
Age,
an Australian newspaper, said, “the deal with
the regional government in the eastern Somali
state of Puntland was invalid because only the
country's transitional federal government had
the power to negotiate the sale of mineral and
oil rights ……
We understand that this event, if not stopped
on time, will have an impact on Range Resources
Ltd and the market of the Australian Stock Exchange
and we ask you as a matter of urgency to inform
your market of this event."………..
"Any violation against this statement
will result in negative consequences and the
external and/or internal culprits will take
the responsibilities on their shoulders,"
October 18, 2005: The President
of Puntland, Mohamed Muse Hersi reaffirmed Puntland’s
commitment to the agreement with Consort Private
Ltd in letter to its Director Anthony Black.
A copy of the letter is available at this link
http://www.rangeresources.com.au/asx/PresidentsLetter.pdf.
November 2, 2005: The Prime
Minister of Somalia, Mr. Ali Mohamed Geedi mysteriously
changed his mind and strongly endorsed the Puntland
deal. He did so in a letter to Hassan Dahir
Mohamud, the Vice President of Puntland. A copy
of Mr. Geedi’s letter is available at http://www.rangeresources.com.au/asx/
primeMinistersLetter.pdf.
April 21, 2006: In a letter
filed with Australian Stock Exchange (ASX),
Range Resources Ltd announced that it secured
a letter of intent from the Korea National Oil
Corporation (KNOC) in respect of a 75% farm
in to a concession area in the Nugal area comprising
a portion of the former Blocks 28 and 29 following
key meetings held in the middle east last week.
A copy of the letter is available at the link
below. http://www.asx.com.au/asxpdf/20060421/pdf/3wdg8d2z322gc.pdf
We hope these
documents will shed light on the mystery surrounding
the Puntland Oil and Mining exploration deal.
Omar M. Abdi
Fairfax, Virginia
USA
E-Mail:oabusa@yahoo.com
Salah Fatah
Laurel, Maryland
USA
E-Mail:sfatah2@yahoo.com
 Click
Here for (Part II)
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