| DHAROOR, Somalia
DHAROOR, Somalia May 21 Canadian oil and gas
exploration company Africa Oil Corp. (AOI.V), has started
seismic mapping of a remote area in Somalia's relatively stable
Puntland region, officials said on Wednesday.
The survey is in advance of exploratory drilling in
Somalia's Puntland region, where the company believes there is a
strong prospect of finding rich oil deposits like those in
geologically similar Yemen, a neighbour across the Gulf of Aden.
The predecessor of ConocoPhilips (COP.N), Conoco, had
exploration rights in the semi-autonomous northern Puntland area
before the 1991 civil war that plunged the Horn of Africa nation
into anarchy from which it has not yet escaped.
Africa Oil has rights to 80 percent of the Nugaal and
Dharoor blocks there, with its joint venture partner, Australian
independent Range Resources (RRS.AX) (RRL.AX), holding the
"It's an exploration," senior company official Kim Watson
told Reuters on the site in Dharoor, as dozens of the engineers
from the U.S., Europe and Africa were busy setting up shop under
the watch of heavily armed Puntland troops.
Africa Oil is obliged to spend $50 million on exploration to
obtain full rights to the 80 percent, and it has the right to
farm out 20 percent of that stake to third parties with the
agreement of Range Resources.
Puntland's government in January 2007 entered into a
production-sharing agreement with the two companies.
The site is a humid, barren area of about 2,600 sq km (1,004
sq miles) near Dharoor town, some 350 km (217 miles) east of the
port of Bosasso on the Gulf of Aden.
"The exploration will run until December when we hope to
start drilling for oil. We have heavy equipment to conduct a
2,500 sq km seismic survey," he said. A hundred local people
have been employed in the operation, he said.
Watson also said they have carried out a similar survey in
nearby Nugaal region. Both Range and Africa Oil have been given
access to seismic data collected before 1991, and have expressed
optimism they will strike oil.
In 2007, Puntland faced stiff opposition from the
internationally recognised interim Somali government, part of
which refused to honour a 2005 deal reached with Range giving it
exclusive concession rights over all minerals and petroleum.
The fight caused a split between President Abdullahi Yusuf
-- who hails from Puntland -- and former Prime Minister Ali
Mohamed Gedi, who later resigned.
Many believe Gedi's resignation was sparked by his losing
the fight with Yusuf, who was formerly Puntland's president and
who has blessed the current deal.
Some clans in Puntland have already expressed unhappiness
with the oil deal, raising the prospect of the type of local
conflict that has heavily contributed to the nation's persistent
Somalia has no proven oil reserves but a joint World
Bank/U.N. survey of northeast Africa 16 years ago ranked it
second only to Sudan as the top prospective producer.
(Additional reporting and writing by Guled Mohamed in Nairobi;
Editing by Bryson Hull and James Jukwey)
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