Somalia and TotalFinaElf sign oil exploration agreement

TotalFinaElf has signed an agreement with Somalia's transitional government to explore for oil in the Indian Ocean off southern Somalia which would be the largest foreign investment in the country since the outbreak of civil war a decade ago, a senior official said. Hassan Abshir Farah, minister for water and mineral resources, said he and TotalFinaElf representative Jean Francisco signed the one-year exploration agreement worth an estimated $ 3.5 mm- $ 4 mm on Feb. 3.
He said that the area of exploration will be in the Indian Ocean between Merca, 120 km (75 miles) south of Mogadishu and Kismayo, 500 km (310 miles) south of the capital. Farah said the government would provide security during the operation. But south Mogadishu faction leader Osman Hassan Ali Atto, who does not recognize the government, has already called the deal "illegal and risky."
Farah said the exploration would begin before June, and if results were positive, a production agreement would be signed.

TotalFinaElf, the world's fourth largest petroleum company, on Jan. 31 announced profits of 49.85 bn French francs ($ 7.1 bn), the highest ever recorded by a French company. At the time, CEO Thierry Desmarest said TotalFinaElf would increase its investment program by 20 % this year and that 71 % of the investments would be in upstream exploration and production.

The Somali transitional government grew out of a national reconciliation conference last August in neighbouring Djibouti where a president and a 245-member parliament were elected. Somalia's central government fell apart in January 1991 when clan-based political factions ousted President Mohamed Siad Barre, then turned on each other, plunging the country into chaos and fighting among warlords. But the government of President Abdiqasim Salad Hassan is facing stiff opposition from a number of faction leaders who refuse to recognize it.