Soma Oil Lobbies U.K. to Oppose Proposed Somalia Moratorium

Soma Oil and Gas Holdings Ltd., the U.K.-based explorer under investigation by the Serious Fraud Office, asked the British government to help block a United Nations proposal that a moratorium be placed on oil deals in Somalia.

Soma, whose chairman,Michael Howard, is the former leader of the U.K.’s ruling Conservative Party, wrote a letter to the Foreign Office requesting a meeting and urging the government to protect the company’s business interests in the Horn of Africa nation.

Soma has spent $40 million on surveys of 60,000 square kilometers (23,166 square miles) off Somalia’s coast, it said on its website. The company was advised in 2013 and 2014 byMark Simmonds, the U.K.’s former minister for Africa, and the Foreign & Commonwealth Office that reaching an agreement with Somalia on oil and gas “would not be inconsistent” with U.K. government policy, according to the letter.

“Lord Howard has made it clear that he would have disengaged from Soma Oil and Gas had that assurance not been forthcoming,” Soma said in the letter, which was given to Bloomberg by an official close to discussions on the issue at the UN Security Council. The official asked not to be identified because the document isn’t public.

Al-Qaeda Militants

The Foreign Office confirmed it received the letter and said it couldn’t comment on the unpublished UN Monitoring Group report. “The U.K. government continues to advise the federal government of Somalia on the importance of having an effective legal and regulatory framework in place before signing oil contracts,” it said in a statement e-mailed Sept. 28.

Soma, a privately held company based in London, didn’t respond to questions sent via e-mail and declined to comment when contacted by phone on Wednesday. It’s the most active oil company in Somalia, which currently has 22,000 African Union personnel backing government forces in their fight against al-Shabaab, the al-Qaeda-linked group that’s been trying to topple the government since 2006.

Insufficient Laws

A UN Monitoring Group report onSomalia to be released this month will repeat recommendations first made in 2013 that the Security Council ban any oil deals in Somalia, according to an official who has seen the report and who asked not to be identified because it hasn’t been published yet. The group argues that the country lacks a legal and regulatory framework to oversee the exploitation of energy resources.

“We hope Her Majesty’s government will oppose any such idea and urge other governments to do the same,” Soma said in the Aug. 11 letter, which was addressed toGrant Shapps, the U.K. minister of state for foreign and commonwealth affairs. A moratorium on oil deals would be “inconsistent” with British Prime Minister David Cameron’s commitment to bilateral trade and investment in Somalia, it said.

Stephane Dujarric, UN Secretary-General Ban Ki-moon’s spokesman, in an e-mail declined to comment on whether the moratorium was being discussed at the UN, saying only that the monitoring-group group has been submitted to the body. Matthew Moody, spokesman for the U.K. Mission to the UN, said in an e-mail that he couldn’t comment until the report is published.

Violence, Corruption

The UN Monitoring Group, which provided information to the SFO about Soma, has repeatedly warned that deals on oil exploration may fuel violence and corruption in a fragile state that’s battling an insurgency by Islamist militants and trying to defuse tensions between rival clan militias.

It is “most unusual” to prevent a sovereign country from developing its own natural resources, Soma said in the letter.

The SFO announced on July 31 it’sinvestigating Soma, along with Soma Oil & Gas Exploration Ltd., Soma Management Ltd. and other units in “relation to allegations of corruption in Somalia.” The company denies any wrongdoing and said the UN monitoring group “fundamentally misunderstood” a capacity-building program in which salary payments totaling almost $500,000 were made to Somali oil officials.

The U.K. government should publicly support the moratorium until the right frameworks are in place in Somalia, Barnaby Pace, a campaigner for Global Witness, the London-based advocacy group, said by e-mail Thursday.

“The U.K. government should avoid backing Soma Oil and Gas’s deal to immediately exploit Somalia’s oil, especially while the company is being investigated for payments to Somali officials,” Pace said.

Source: Bloomberg