His Excellency Mr. Dahir Riyale Kahin,
President of Somaliland
regarding PSA between the government of Somaliland and unknown
Company called REC for exclusive right to conduct petroleum
operations in Somaliland
HE. Dahir Riyale Kahin
We are a group
of experts in the field of petroleum exploration with no
political aspirations. As compatriots of this country we feel
compelled to warn the government and the people of this country,
the dangers that the country may face if they neglect and
destroy the natural resources that are present in the country.
We believe that
hydrocarbon is Somaliland’s most important asset. Handled
correctly, it will be the basis of the country’s future
development. However, our main concern here is the destruction
and exploitation of the country’s hydrocarbon resources by its
own elected authorities with the help of professional bandits.
As you are
aware, your government has secretly signed a Production
Sharing Agreement (PSA) with an obscure UK-based company called
Rova Energy Corporation Limited (REC) in April, 27, 2003 for the
sole and exclusive right to conduct Petroleum Operations
including exploration, appraisal, development and production in
blocks 35, 36, M10 and M10A (East of Berbera to East of
Laasqoray, offshore and onshore). These blocks are located in
the heart of petroliferous province and were operated by Amoco
and its partners before they declared force majeure in
1989. Furthermore, your government has recently (July, 2005)
permitted REC to commence the Second Exploration Phase,
although the Initial Exploration Phase has expired in April 26,
2004, while REC did not fulfil its obligation under the
We remind your
government that there should be a high level of competency and
transparency in all agreements that the government has entered
into, including how the resources from these investments will be
used for the interests of the people.
the Agreement and a report prepared by REC, we believe that this
Agreement is illegitimate, and it should be terminated
immediately. The reasons for pronouncing this are listed below:
Corporation (REC) Limited
registered office of REC is Falcon House, 257 Burlington Road,
New Malden, Surrey, KT3 4NE, UK. The Company’s
registration Number is 03861142. REC changed its name on April
10, 2003 from Rova Energy Limited. It claims that the nature of
its business is services to oil and gas extraction.
There are only
four officers in the company with directors being Ananda Kumar
CHAKRABARTI and Jawahir CHAKRABARTI and the secretary as Amina
CHAKRABARTI. All three of them are residing at the same address.
The fourth individual is Vincent Dato LEONG, a Malaysian who is
living in Kuala Lumpur.
The company has
only issued 100 shares worth £1 each. Therefore, the total
nominal value of issued shares is only £100. The shareholders
are Dr. Jawahir ALI who held 16 shares, Dr. Jawahir Mohamed ALI
who held 1 share, Mr. Ananda Kumar CHAKRABARTI who held 17
shares, Mr. Anandar Kumar CHAKRABARTI who held 1 share, and
Westmont Offshore HK Ltd who held 65 shares. The first four
shareholders are residing at the same address of that of the
directors of the company. It is, therefore, obvious that they
are the same two individuals who are using different
names to deceive the authorities.
attached documents and the above account it is clear that this
company was established to trick the government of Somaliland
with the intention to filch the hydrocarbon resources of the
country. As seen from the Annual Return, this company has no
means to conduct petroleum operations in the country. It is a
broker, trying to take advantage from the lack of law and order
in the country, and it is not a genuine company.
this company has no track record of exploration and production
of hydrocarbon in anywhere else in the world. Moreover, it has
no qualified Petroleum Geologists, Geophysicists and Petroleum
Engineers who can assist the hydrocarbon potential in the
Contract Area. As a result your government should have not
appointed this bogus company to be the Contractor for the
Petroleum Operations in the Contract Area.
There are a lot
of flaws in the Agreement which your government have signed with
REC. Some of these are listed below:
no approved Mining/Hydrocarbon Act. Therefore, we believe
that the PSA should have not been signed without the existence
of Mining Act in the country. The priority should have
been to establish the Mining Act, so that the future PSA
and Exploration Licenses should be according to the Mining
Act of the country.
interest of Somaliland, we believe it is better to renegotiate
with the concession holders (i.e. BP and its partners), instead
of signing a new agreement with a bogus company. Furthermore, it
is questionable whether this Agreement is legal since the
concession holders declared force majeure in 1989 due to
the civil war in the country.
Agreement the Contractor is not obliged to carry out rigorous
exploration activities for the purpose of exploring the oil and
gas potential within the Contract Area. The Contractor is not
required to acquire geological and geophysical data, for example
it is not obligatory for the Contractor to:
Shoot, process and
interpret two dimensional or three dimensional seismic
lines. It is a common practice with this type of agreements
to demand the Contractors to acquire minimum area coverage
(e.g. 300 sq. km) of 3D seismic.
Carry out an upper section
site investigation survey in the Contract Area to ensure a
safe and environmentally sound base for drilling.
Drill exploration wells in
the Contract Area during the Initial Exploration Phase. This
phase should include the drilling of two to six exploratory
agreement, the Contractor is not obliged to pay annual acreage
fees in the Contract Area. It is a common practice in the
industry for the Contractors to pay an annual acreage fee of up
to one thousand ($1,000) dollars per square kilometre of the
Contract Area during the Exploration Period. Knowing that the
concession area of blocks 35 and M10A is 16,272 square
kilometres, it is apparent that the country is losing a huge
amount of needed income.
Employment and Training
does not include providing training opportunities to the
Ministry’s professionals, and employment preferences for the
citizens of Somaliland. It also does not include a community
has not fulfilled its Obligation under the PSA
under the Agreement include:
“5.2 (a) (i)
During the Initial Exploration Period, the Contractor shall
conduct the following exploration work programme:
reprocess and reinterpret existing seismic data;
drilling location(s) and logistical programmes for one or more
Expenditure for this period shall be Five hundred thousand US
dollars (US$ 500,000).”
Exploration Period was 12 months from the date of the contract.
It is clear (as documented below) that the Contractor has not
fulfilled its obligation in the Contract Area under Article 5.2
(a) (i). Therefore, the Agreement should have expired in April
26, 2004 after the end of the Initial Exploration Period.
Failure to Review
Agreement, the Contractor is required to review existing
geophysical and geological data. However, the only report
that the Contractor submitted to the Ministry of Water and
Mineral Resources was not an original report. The Contractor has
copied the report from existing reports and publications. It is
clear by examining the report that the Contractor has cut and
pasted without adding new data or interpretation, and at the
same time claiming to be its own work. This is a crime that
deserves a punishment.
the report does not contain enough detailed information that can
be used to plan drilling locations for exploratory wells.
Failure to Reprocess
and Reinterpret Existing Seismic Data
There is no
evidence at all to show that the Contractor has either
reprocessed or reinterpreted the existing seismic data. Once
more the Contactor has copied a few sections of 2D seismic
profiles from existing company reports to allude that it
reinterpreted these lines. Moreover, in the report there is no
evidence to indicate that the Contractor understands the
Petroleum System of the Contract Area.
Failure to Define
In the report,
the Contractor has not mentioned the location of exploratory
wells as demanded by the Agreement. This is not surprise because
Never visited the Contract Area
Has no knowledge of the Petroleum System
of the Contract Area
Has not reprocessed and reinterpreted the
Has not acquired new seismic data that
can be used to define the location of exploratory wells
It is, therefore, foolish to suggest that the Contractor
can define the location of exploration wells without the
help of 2D and 3D seismic data. 2D seismic data has been
very effective in mapping traps for hydrocarbon
accumulations. 3D seismic surveys are now being
implemented, and have proved very successful in the
exploration for oil in small fields.
Has not interpreted
exploration models that forms the basis for a decision
about potential exploration drilling
Has not planned logistical programmes for
drilling exploratory wells
Failure to Meet
Agreement, the Contractor should have expended no less that US$
500,000 during the Initial Exploration Period. However, there is
no record to show that the Contractor has spent this amount for
the purpose of exploring the oil and gas potential within the
Contract Area. It should be noted that the Contractor never
visited the Contract Area. The only activity that it claims to
have carried out is the report that it copied from the existing
On the basis of
the above account, it is apparent that:
Rova Energy Corporation
Limited is a fake company that has no income to conduct
exploration activities in the Contract Area. It is trying to
take advantage of the situation of the country, to exploit
the hydrocarbon resources of the country.
There are a lot of
imperfections in the Agreement including the lack of
Mining Act, the absence of rigorous exploration
activities and the lack of annual acreage fees.
The Contactor (REC) has
breached its obligations in the Contract Area under Article
5.2. (a) (i).
It failed to
complete the activities listed in Article 5.2. (a) (i).
Exploration Period has expired in April 26, 2004
The Contractor did not
carry out the Petroleum Operations in the Contract Area
diligently; with due regard to good oil field practices.
This bogus Contractor is
blocking well known oil and gas companies that have skills
and capital to invest and explore the country.
To be in an agreement with
this phoney company is a disgrace to our nation. It
highlights your government’s view with regards to
international exploration licence awarding processes and how
to safeguard the country’s natural resources.
Therefore, we urge the President to:
this Agreement immediately.
To stop this fake
Contractor to have further rights to conduct Petroleum
Operations or recover any Petroleum Costs in the Contract
To investigate the corrupt
government officials who authorised this Agreement, and
bring them to justice.
whatever the motives and the intentions behind this scandal are,
we believe that it is within your government’s duties to protect
the country’s natural resources.
We hope the
will of the sincere citizens like us, shall have more thought
with your Excellency.
We look forward to hearing from
Mohammed Yusuf Ali, BSc, MSc, PGCE,
Professor Ali teaches and researches in petroleum
geophysics at The Petroleum Institute, Abu Dhabi, UAE.
He can be reached at
Ahmed Ali, BEng
(hons), MSc, Ph.D, DIC
Dr. Ali is a Petroleum
Engineer currently working at Kings College London, University
can be reached at
Hon. Qasim Sheik Yusuf, The Minister of Water and Mineral
of Rova Energy Corporation Ltd
Current Appointments Report
363s Annual Return