Oil Companies Hover Over Western Sahara But Who Calls The Shots

Story published by Oilbarrel.com, 14 December 2005.

Published 15 December 2005

Oilbarrel (London)
14. December 2005
By Helen Campbell

Thirty years since Morocco was effectively handed control of Western
Sahara by Spain, the conflict, said to be oil-driven, between Rabat and
Western Sahara's exiled government shows no sign of easing. In a follow up
article, Helen Campbell finds the stakes are higher still.

Tensions surrounding the natural resource potential of Western Sahara are
flaring. The Polisario, the government of the Saharawi Arab Democratic
Republic (SADR), says it has reliable information that US company Kerr
McGee (KMG), is now making plans to drill offshore the disputed territory.
The Polisario has publicly said it cannot guarantee the safety of anyone
working for or on behalf of the Oklahoma-based company. KMG has a
reconnaissance permit awarded by Moroccan oil ministry Onhym, but the US
company's presence in a non-self governing territory has attracted fierce
international criticism and campaign.

Raising the stakes higher still, the Polisario has itself begun
negotiations with a number of companies who it says have shown an active
interest in offshore blocks it offered in a licensing round launched in
London six months ago, to the irritation of Rabat and, no doubt, KMG.

Although those negotiations can only lead to drilling permits upon a peace
agreement being brokered between the two sides - and there has been little
evidence this year that this is any nearer - it is clearer than ever that
both sides mean (oil) business. The Polisario is also attracting interest
to Western Sahara's onshore potential, in the shape of a newly-registered
company connected to Wessex Exploration.

KMG and partners Pioneer Natural Resources and Kosmos Energy, which yet
again renewed a permit to analyse the offshore Boujdor block for a further
six months at the end of October, are alone in their controversial siding
with Morocco over Western Sahara, at least in terms of known formal
agreements. The influential Norwegian Petroleum Fund dropped $52 million
worth of KMG shares when the Fund said KMG's actions were unethical and
could undermine UN peace efforts. In late November two Swedish funds
announced they would divest KMG shares early next year, and campaigners
are now putting pressure on the Norwegian Petroleum Fund to dump Pioneer.

KMG remains typically tight-lipped over its plans. "Until we complete the
analysis of the data we cannot speculate on future activities," says a
spokesman, adding the company was unable to say when the studies would be
complete. The Polisario says it has evidence that the US company is making
plans to drill. Under current legislation, such action would be illegal
and not tolerated.

"On the drilling issue, we have received information from reliable sources
who told us that KMG, Kosmos and Pioneer are indeed planning to drill,"
says Kamal Fadel, the Polisario's representative in Australia.
"Furthermore, the fact that they keep renewing their permits and spending
money is not for fun but for some purpose. The logical and natural course
is that companies will have to drill but when, we don't know."

Sending a clear message to the US company, the Polisario said in a recent
statement that it "[could not] guarantee the safety of any individual
involved in the intended operations of Kerr-McGee. Existing cease-fire
arrangements do not envisage such operations in a war zone, and
consequently the Saharawi army must carefully consider its position and
response if these inflammatory activities proceed."

For its part, KMG continues to stress only that its current activities do
not contravene international law as they amount only to data evaluation.
And asked how many staff are in either Morocco or Western Sahara, the
company replies only that the reconnaissance permit is handled by its
office in Houston. The company's subsidiary Kerr McGee du Maroc is however
believed to have an office in Rabat.

The United Nations mediated a ceasefire in the area in 1991 but plans to
hold a referendum on Western Sahara's independence have never been
realised due to squabbles over who is eligible to vote. Various efforts
have been made, perhaps increasingly half-heartedly, to renew peace talks
between Rabat and the Polisario but the current envoy, Dutchman Peter van
Walsum, who reports to the UN Secretary General, is not felt to carry much
clout nor hope for peace.

Minurso, the UN's peace mission to the region, was renewed for a further
six months at the end of October. Minurso sources said the mission did not
know what KMG's plans were and declined to comment on the company's
activities. Nevertheless, the mission continues to refer to a 2002
document that concludes that drilling would be in violation of
international law on non-self-governing territories.

Sources said it was surprising that the UN appeared to be distancing
itself from the drilling and other oil matters, given that it is widely
felt internationally that KMG's continued presence in the region increases
Rabat's bargaining chips and hampers the UN's own peace efforts. Refusing
to stand back and let Rabat award drilling rights unchallenged, the
Polisario offered the whole of the offshore territory, divided into twelve
blocks, at its licensing round last May. Says its Australian
representative Fadel:

"We have received several applications from multiple companies and are
going to start the process of negotiations with them soon. We expect to
announce the award of blocks by the end of this year or by the latest in
January of next year."

Fadel declined to name the companies in question. Sources at Woodside,
Sasol and Montrose Industries, among those present at the round’s launch
in May, said they were not pursuing an interest in Western Sahara. Premier
Oil and Perth-based Ophir Energy, also in attendance, are however strongly
believed to have bid.

Although the subject of the Polisario's round is the offshore, the
potential of Western Sahara's onshore territory has also attracted
interest. Wessex Exploration, which previously had a dialogue, albeit
short-lived, with authorities in Rabat, recently registered Maghreb
Exploration in London and has assigned the data it holds on the vast Aaiun
basin to the new company.

"The Aaiun is a big basin and needs a lot of exploration," says managing
director Fred Dekker. "The drilling that was done, mostly in the 1960s and
1970s, was very sparse. There is no information on the type of source rock
but there must be samples around and that is something I am pursuing."

Meanwhile, Onhym has enlisted the US Trade and Development Agency (USTDA)
to accept bids on its behalf for the supply of a Geographic Information
System (GIS) to help it map geological structures in "Morocco".

The deal apparently does not include Western Sahara as "USTDA does not
provide support to any projects that will take place in or affect [the
territory known as Western Sahara]" the agency told oilbarrel.com. Senior
representatives added that the maps used for the project stop at the
internationally-recognised borders of Morocco, this being something the
Moroccans agreed to when the project was first negotiated four years ago.
The GIS maps nevertheless disagree with the map used on Onhym's website,
in which Onhym details Moroccan oil joint ventures including that of KMG
and which shows Western Sahara as part of Morocco.

The USTDA says there is nothing contained in the contract that prevents
the application of the technology provided under the contract to territory
in Western Sahara, declining to speculate on how it may be used by Onhym
in the future.

"We have no reason to think the technology will be used for anything other
than that for which it was originally designed," senior USTDA
representatives told oilbarrel.com.

As the impasse continues, results from the dozen wells scheduled to be
drilled off Morocco-proper over the next three years will be closely
watched. Coupled with the significant discoveries made in recent years in
the waters off Mauritania to the south, any discoveries off Morocco will
serve only to heighten the determination of the various parties to tap
Western Sahara. A feeding frenzy could well become a bloodbath.



Statement by the SADR Government

"Intended Activities by Companies in Western Sahara Against the Express Wish of the Indigenous Saharawi Population". Statement of 12 oct 2005.

12 October 2005

The oil map is changing in occupied Western Sahara

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Oil Companies Very Keen On Western Sahara

Oil Companies Very Keen On Western Sahara Despite The Geopolitical Problems. Oilbarrel.com, 14 May 2005.

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Kosmos Energy maintains propaganda site after Western Sahara exit

Kosmos Energy has decided to keep their website defending Western Sahara oil search - even after they have left the territory.

06 March 2018