Energy in Africa  :: English Version


Oil intensifies dispute

Published: 01-SEP-02

The major protagonists in the battle for Western Sahara are the Kingdom of Morocco, which has been occupying the territory since!975, and the government of the Saharawi Arab Democratic Republic (SADR) that operates in exile from Western Algeria.

Algeria stands to benefit most from the oil finds, given its relationship with the Western Sahara. Significant oil and gas resources of its own make it the largest recipient of US direct investment in the Maghreb region.

For the time being, the oil companies are relatively minor players in the political tussle. However, if their exploration yields the expected results, the Western Sahara will undoubtedly come off the back burner of international attention.

Morocco has suffered a setback in the oil exploration battle.

Last year, it gave the French giant TotalFinaElf and the mid-sized American company Kerr McGee the go-ahead to explore for oil in the disputed waters.

However, earlier this year UN Under-Secretary General for Legal Affairs Hans Corell found that Morocco was not listed as the administrative power of the territory on the UN's list of self-governing territories.

This not only means Morocco did not have the rights to licence marine acreage off the Western Sahara, but it also invalidated the Madrid agreement in terms of which the collapsing Franco regime gave Morocco and Mauritania rights over the former Spanish protectorate.

The exploration is going ahead because the UN legal opinion only prohibits production, not exploration. But it has nevertheless given serious pause to the oil companies.

Oil companies have had their fingers burned before in disputes of this kind. For example, companies which bought rights in the disputed East Timorese territory thought it would never extricate itself from Indonesian occupation and lost their concessions when it did.

The appointment by TotalFinaElf of Norwegian company TGS-NOPEC to conduct the seismic survey in Saharawi waters has created a shareholder storm in Oslo. Norway has one of the strongest pro-Saharawi lobbies in Europe.

In May this year, the Saharawis fired back, announcing a technical co-operation agreement with an Anglo-Australian company. Fusion Oil ft Gas PLC.

TotalFinaElf reacted by expressing an interest in also talking to the SADR government, according to Mohatned Abdelaziz, president of the Saharawi Arab Democratic Republic (SADR).

Abdelaziz said the signing of the technical co-operation agreement had created enormous interest in exploration circles. An American company, which he was not yet at liberty to name, was among those in advanced negotiations with his government that he leads from outside the Algerian desert town of Tindouf.

"We have been dealing with Fusion for some years," said Abdelaziz. "They are a relatively small company, although they are represented on both the London stock exchange and on Wall Street. They take very seriously their commitment to make a detailed study and evaluation of our offshore petroleum potential.

"This is the way of the future - an act of faith in the right of the SADR to determine the future of the Western Sahara. Fusion realises there will be some reaction from the Moroccans, who are illegally occupying our country, but they are prepared for this." Abdelaziz said TotalFinaElf had also expressed a desire to make contact with the SADR on the exploration issue.

Fusion MD Alan Stein said the study of the offshore acreage would take up to 16 months. "The TCA covers the entire offshore territory of the SADR, an area of about 210,000kms square extending from Mauritania in the south to Morocco and the Canary Islands in the north.

"Upon completion, Fusion will have the exclusive right to select a maximum of three exploration licences, each covering an area of up to 20,000 square kilometers."

The government of the SADR has given an undertaking to award the nominated exploration licences with six months of the SADR being admitted to the UN.

Fusion is the largest holder of off- shore exploration acreage in north-west Africa. It has completed TCA-type arrangements with the governments of The Gambia, Guinea Bissau, Senegal and Mauritania.

Abdelaziz said his government's negotiations with the as-yet-unnamed US company involved exploring onshore acreage near the Western Sahara border with Algeria.

Advisors said the existence of oil reserves had been established by satellite photography.

The US company wanted to check their commercial viability with a view to signing an exploration licensing agreement. "The presence of source rock off Western Sahara is proven and we have sufficient evidence of it extending across the border," Stein said. Morocco has not responded to the Fusion deal.

South Africa's Energy Africa became peripherally involved in the squabble when it was granted offshore exploration rights off Tizent and Cap Draaa last year by the Moroccan National Office of Oil Exploration and Exploitation (Onarep).

While Energy Africa's concession is in undisputed Moroccan waters, the announcement was made simultane- ously with the acquisition in Saharawi waters by Kerr McGee and TotalFinaElf.

Energy Africa insisted that it had no part of the disputed claim.

Morocco's admission that it cannot implement the UN peace plan, which it signed in 1991, is further damaging its relations with Algeria as well as the 13- year-old Maghreb Arab Union to which both countries belong, along with Libya, Tunisia and Mauritania.

Morocco accuses Algeria of seeking access to the Atlantic coast through a "puppet Polisario state", while Algeria says it is backing the right to self-determination of the Western Sahara's people.

Morocco recently turned down Libyan leader Muammar Gadaffi's offer to intercede in the Western Sahara impasse. The Libyan leader would have taken over the MAU leadership from Algiers after a summit called for May which was postponed by Algeria because Morocco's King Mohammed VI said he would not attend it.

The summit, scheduled for Algiers, would have been the bloc's first since 1994.

Government officials in Algiers said Gaddafi had asked for the summit to be postponed.

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