They tried to tell Genel Energy not to invest in Somaliland but they were told to fuck off.
Former BP Chief's New Quest: Wildcatting on the Edge of Danger
When London's Genel Energy GENL.LN +1.32% PLC decided last year to search for oil in Somalia, it didn't negotiate with the country's internationally
recognized government in Mogadishu.
Instead, Genel Chief Executive Tony Hayward flew to a city about 500 miles north: Hargeisa, the dusty capital of breakaway Somaliland. He
visited the separatist president at home and told the resources minister that Genel could spend about $100 million prospecting there.
"We will find oil," said Mr. Hayward at the July 2012 meeting, according to him and the resources minister, Hussein Abdi Dualeh. Somaliland gave
Genel permission to prospect.
Mr. Hayward, BP BP.LN +0.29% PLC's chief during its 2010 Deepwater Horizon disaster in the Gulf of Mexico, has joined a breed of wildcatters who
deploy a risky and sometimes lucrative strategy: Look for oil in politically or geologically fraught lands after cutting deals with governments that claim
the lands, even if those claims are in dispute.
These oilmen operate on what the 56-year-old Mr. Hayward calls "the political frontier." They sometimes defy the wishes of Washington and the United
Nations, which say companies can amplify conflicts and foment instability by entering disputed lands.
Genel executives Tony Hayward and Mehmet Sepil hope to find oil in Somaliland. Bloomberg News
In Somaliland, Mr. Hayward is stepping into a decadeslong conflict. The northern-Somalia region declared independence in 1991. But Somalia still claims
it, and the U.N. doesn't recognize its independence.
The breakaway Somaliland's oil agreements are particularly contentious because they sometimes overlap leases that the central Mogadishu government
negotiated years ago and that are held by companies such as BP, Royal Dutch Shell RDSB.LN +0.07% PLC and ConocoPhillips. COP +1.51%
A U.S. State Department official says that without a resolution between the central and regional governments, oil deals "are going to create
conflict." A July U.N. report says making oil deals in fractious Somali regions could "constitute threats to peace and security."
Somalia believes Genel's deal could "destabilize" the nation, the Mogadishu government told Mr. Hayward in a 2012 email The Wall Street Journal
reviewed, alleging that Genel is "in search of more profits by creating more problems in this part of the world."
Mr. Hayward says he disagrees. Since BP replaced him in 2010 after the Deepwater Horizon explosion and spill, he has staked his future on the notion
that finding oil will not only make money but also make people stop fighting.
"If people have the opportunity to earn money and buy a BMW, rather than run around the hills with a Kalashnikov," he says, "they'll do it."
Somaliland's Mr. Dualeh says oil will help win recognition and generate income for his stable but extremely poor region.
Workers drilled for oil at a Genel well in Iraq's Kurdistan region. Justin Scheck/The Wall Street Journal
Because small companies have less money, "by definition they have to go to the frontier, either the technical frontier or the political frontier," says
Mr. Hayward. "There's no point in them following the big guys."
Mr. Hayward was drawn to Somaliland because it seemed a promising place to repeat Genel's success.
Genel was founded in 2002 by Mehmet Sepil, a Turkish construction magnate. He says current Iraqi president and longtime Kurdish leader Jalal Talabani
phoned that year with a proposal: Develop Kurdistan's neglected oil fields.
"At the time, the political risk was very, very big," says Mr. Sepil, now Genel's president, from his Ankara office. (The Che Guevara portrait on his wall
shows, he says, that he is an "old leftist.") The U.S. was preparing to invade Iraq, and relations between Turkey and the Kurds were "very sensitive."
Mr. Talabani, who suffered a stroke, couldn't be reached for comment.
Mr. Sepil and a partner agreed with Kurdistani leaders to spend at least $35 million prospecting, he says. Unable to hire a drilling contractor—none could get
insurance—he spent $14 million for a used rig he trucked into the hills, he says. He eventually struck oil.
The Baghdad government told Mr. Sepil his Kurdistan leases weren't legitimate, he says. In 2004, he met Baghdad officials to negotiate approval, documents
reviewed by the Journal show. They never reached a deal.
Baghdad adheres to its long-standing position, says an Iraqi Oil Ministry spokesman, that contracts signed in Kurdistan aren't valid if the central
government hasn't approved them. He says Baghdad is open to negotiating with Kurdistan. A Kurdistani-government spokesman says its deals are legal.
Genel continued drilling despite the controversy.
At the dinner, Mr. Hayward, who dresses like a London banker, told the long-haired Mr. Sepil he wanted to move into politically or geographically risky
Mediterranean and African regions. They agreed they could use Turkish and U.K. diplomatic contacts for access. "I said, 'Let's use our relationships like
I used it in Kurdistan,' " Mr. Sepil says.
Mr. Hayward's firm acquired Genel in a deal that took it public in 2011. One technically challenging region they began exploring was off Morocco's coast,
Mr. Hayward says.
Genel also consulted an in-house geologist with knowledge of Yemen's oil deposits. Such deposits, he told Genel, should also be present across the Gulf of
Aden in Somaliland.
Somaliland fit the profile Mr. Hayward and Mr. Sepil sought: geologically promising, too risky for big companies and with diplomatic ties to their home
countries.
Like Kurdistan a decade ago, Somaliland is self-governed and more stable than Somalia's south. The capital, Mr. Hayward says, "is very, very poor—as
Kurdistan was when it all started in Erbil."
Turkey and the U.K. support Mogadishu but also support oil development in Somaliland, say diplomatic and oil-company officials. "We welcome inward
investment into Somalia, including Somaliland," the U.K. foreign office says.
As in Kurdistan, oil seeps from the ground. Yet big oil companies aren't prospecting. Shell and others had leases in the 1980s to explore in Somalia,
including parts of Somaliland, but suspended operations amid growing violence.
In the past decade, wildcatters began seeking local Somali leases. London's Ophir Energy OPHR.LN +0.51% PLC entered Somaliland in 2004 by acquiring
an interest in a company that was granted a concession there in 2003—one that overlaps with a lease BP holds from Mogadishu.
Ophir says its lease is legitimate. Its partner, RAK Gas LLC of United Arab Emirates, in September acquired a controlling stake in the lease; RAK Gas
didn't respond to inquiries. BP says its Somali leases are valid and that it is discussing them with Mogadishu.
Mogadishu says it considers leases by regional Somali governments invalid. The constitution "doesn't allow any federal states to enter any agreements,
whether that's Somaliland or any other region," says Somalia's natural-resources minister, Abdirizak Omar Mohamed.
In July 2012, Genel chartered a plane to Hargeisa. Somaliland's Mr. Dualeh says he was thrilled to see Mr. Hayward—whom he knew from TV newscasts—
arrive at his ministry building.
After Somaliland announced the Genel deal, Mogadishu objected: "There is no 'Independent Republic of Somaliland,' " federal oil adviser Patrick
Molliere wrote in an email to Mr. Hayward, reviewed by the Journal. "You were the BP CEO, and you know that you cannot sign with a local federal
government."
Mr. Hayward says he was unfazed: "It's not dissimilar to the experience in the Kurdistan region of Iraq." Genel says it believes the regional government
has jurisdiction.
Genel's block overlaps with a ConocoPhillips lease from Mogadishu. ConocoPhillips isn't exploring in Somalia, but "we have not relinquished our interests
there," a company spokesman says.
Mogadishu has decried other such deals. "Companies like yours are creating potential possible instabilities," Mr. Molliere wrote in May to Chairman
Bijan Mossavar-Rahmani of Norway's DNO International AS DNO.OS +4.12% A, which has an exploration agreement with Somaliland. Mr. Mossavar-
Rahmani says the lease is valid.
Lane Franks, president of Phoenix-based Liberty Petroleum Corp., formed a company that agreed last year with Somalia's Galmudug state to explore an
area there that Mogadishu had awarded to Shell.
He negotiated with Galmudug President Abdi Hassan Awale, he says. The U.N.'s July report called Mr. Awale a "warlord" who fought U.N. peacekeepers in
the 1990s. Mr. Franks says he is aware of Mr. Awale's history but believes he has changed. He "seemed to be a man who really wanted what was best for
his people,"
he says.
Mr. Awale, by phone, said: "I don't know what you mean about, with the 'warlord.' " He declined to comment further, requesting contact by text
message; he didn't answer subsequent texts.
Mogadishu and Shell officials say they objected to the leases. Somalia's supreme court approved Galmudug's right to sign leases, says a Mogadishu
official, adding that the central government expects to appeal.
Shell CEO Peter Voser says Shell is discussing returning to Somali offshore sites. At a March meeting in the Netherlands, Shell officials told Mogadishu
officials they "should take responsibility and action" on leases that overlap Shell's, according to documents the Journal reviewed. Shell and Mogadishu
officials confirm the meeting.
Genel teams this year began seismic tests in Somaliland. They pulled out this September after a security threat. "Discussions continue with the
Somaliland government in order to facilitate a resumption of activity," Genel said last month.
Somaliland's Mr. Dualeh says it may create an armed "oil protection force."
Source
http://online.wsj.com/news/articles/SB1 ... 3033516258
independence is sacrosanct and is following the steps of s. sudan and eritrea 
,....you must be really dumb dirs if you think you'll get recognised through signing all the co-operations deals with us walaweyn! 
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