AFRICA MONEY-Somaliland hopes oil will replace goat dependence

Ed Stoddard

CAPE TOWN, Nov 1 (Reuters) - Wanted: investors for small

African nation with good oil and mineral potential - no seat at

the United Nations but history of independence in rough


The break-away nation of Somaliland is a tough sell but the

announcement this week that serious hydrocarbon exploration is

about to kick off there shows that oil talks, regardless of

political status.

For Somaliland, an internationally unrecognised state of 3.5

million people that declared independence from Somalia in 1991,

it promises to be a game changer.

"We need to find a way to earn hard currency besides selling

goats, sheep and camels to Arabs. This is the only way we earn

hard currency now," Hussein Abdi Dualeh, the minister of energy

and mining, told Reuters on the sidelines of an African oil

conference in South Africa organised by Global Pacific &


Ophir Energy Plc, Australia-based Jacka Resources

and Genel Energy, which is headed by former BP

chief executive Tony Hayward, are all about to start

exploration in Somaliland.

Dualeh said the investments would be worth tens of millions

of dollars, small change in the global oil industry but a

windfall to a government that only has a budget of $120 million.

Gas discoveries off Mozambique and Tanzania and oil finds in

Uganda and Kenya have sparked a hydrocarbon scramble into

previously unexplored parts of Africa.

Oil companies often go where other investors fear to tread,

including other unrecognized statelets such as Kurdistan.

"Oil companies are concerned about geology, not politics,"

Dualeh said.

He also said Somaliland offered investors something sorely

lacking in anarchic Somalia: stability.

"We control our borders, we have a police force and

military. We have had four governments come and go with

democratic elections," he said.

The territory has not exactly been an oasis of peace,

however. Fighting erupted there in January after the leaders of

the northern regions of Sool, Sanaag and Cayn decided to band

together into a new state called Khaatumo.

Somaliland's troops have since clashed with militia fighters

loyal to Khaatumo, with reports of dozens of casualties.

And what about pirates?

"The pirate problem is not off our coast, it starts in the

Indian Ocean with Somalia. We have a nimble coast guard that

does its job with limited resources," Dualeh said.

If oil is discovered, Somaliland would also welcome the

steady stream of revenue that would follow.

Dualeh said livestock sales across the Red Sea to Saudi

Arabia followed a seasonal pattern with sales peaking during the

annual haj pilgrimage.

"We need to get stuff out of the ground. Selling livestock

during the haj is not sustainable," he said.

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