"In 20 years it will look like Dubai," said Liban Bogor from the front seat. We were bumping over the rubble in a Toyota land cruiser at 10mph, returning from a feedlot on the outskirts of Bosaso, a port town on the Horn of Africa. Bogor is an influential local "businessman," and around here that usually means a warlord, but I struggled to share his optimism. We passed youths carrying Kalashnikovs and children playing on trucks with mounted .50-calibre machine guns. Dubai it is not.
Bosaso is a hardscrabble Somalian town. The economy, such as it is, depends on the export of goats across the Gulf of Aden to Yemen. The beach is a vast latrine. In huts on the edge of Bosaso live refugees from Ethiopia and war-torn southern Somalia. Some of them try the crossing to Yemen; many die in doing so.
When our plane touched down in the town after a five-hour flight from Nairobi, we emerged to be greeted by men chewing the narcotic qat as they slouched over their AK-47s. They were not a friendly bunch. "Don't take any more pictures of them," an Australian mercenary with local knowledge warned us.
Bosaso lies in the north of Puntland, a semi-autonomous province in northeast Somalia that has achieved global notoriety because of its pirates. These well-organised buccaneers attacked 70 ships last year. In November they even seized a Saudi oil tanker carrying $100m of crude oil. The fishing village of Eyl, in southern Puntland, has been dubbed, like the 17th-century pirate haven, Port Royal in Jamaica, the "wickedest place on earth."
Despite the piracy, the anarchy that afflicts the south of Somalia feels a long way from Puntland, although Ethiopia's plans to withdraw its army from Somalia could, some analysts say, leave the entire country on the brink. Sharia law is alien to its clan-dominated society, which locals say is the reason for the province's relative peace. Some pirates claim their booming business is a model of inter-clan co-operation. And, for now, Puntland is on the right side of the power battle further south. The president of the Ethiopian-backed transitional Somali government, Abdullahi Yusuf Ahmed, is a former president of the province and Puntlander fighters surround him in Mogadishu.
But violence isn't far beneath the surface. The offshore piracy is just the most visible symptom of Puntland's—and Somalia's—dysfunction. Grenade attacks and gunfights erupted in Bosaso in 2008 and local reports say a state of emergency was recently imposed across the region. Somaliland, a neighbouring part of Somalia that declared (internationally unrecognised) independence from Mogadishu in 1991, claims ownership of part of Puntland. Recent clashes between the two have resolved nothing.
All this makes Bogor's dream of Puntland as the new Dubai hard to picture. Yet there's a reason for his optimism: oil. Until recently, Bogor was a director of a small Australian oil company called Range Resources, which believes it is sitting on up to 10bn barrels of oil in the province. It wouldn't turn Somalia into a new Saudi Arabia, but it would transform this impoverished territory—and make vast fortunes for those in control of the wells.
Puntland shouldn't have to wait long to find out which view is correct. Range and its more experienced Canadian partner, Africa Oil Corporation, say they will drill their first well, in the Dharoor block, in the next three months. If Range finds oil, its share price on London's Alternative Investment Market, the junior stock exchange, will soar. The directors say they hope to be "cleaned out"—or taken over—by a larger firm. "We're not oilmen," Peter Landau, one of them, told me. They are corporate adventurers: the kind of men who enjoy travelling in convoy under armed guard and aren't afraid to get their hands dirty to cut a deal.
Puntland is already counting on the oil. The provincial government's five-year development plan states, erroneously, that "500m barrels of recoverable oil have been discovered so far." When I and a handful of other journalists visited the place, at Range's invitation (a PR effort designed to drum up shareholder interest), the provincial president and his ministers seemed to think that the company could make Puntland rich beyond the dreams of the most qat-crazed pirate. In their minds, the days of electricity blackouts in the president's office are over.
Oil would, of course, be a more mixed blessing for Puntland as a whole. When I asked the president, Mohamoud Musa Hirsi, what he would do with revenue from future oil production, he replied: "Spend it on security." That is because oil will very likely lead to another civil war. Hirsi and others in the government fear both Somaliland, whose territorial claims extend to land on which Range plans to drill, and the transitional federal government (TFG) in Mogadishu, which might seek to reassert control.
Despite his own background in Puntland, the TFG's president Yusuf says that natural resources belong to Somalia as a whole. He has even put out feelers to Asian and middle eastern firms to help him form a national Somali oil company. But for the time being, the TFG does not have the means to enforce its will in Puntland, so Range's contract remains valid.
It is rumoured that Chinese or other Asian investors may help fund an invasion of Puntland, should oil be found. Some investors have already negotiated with neighbouring Somaliland, and the mineral-rich areas along its border could be the pretext for a violent scramble. Range denies reports it has paid members of the Somaliland government for access to the disputed area. Somaliland, meanwhile, hopes the prospect of oil will persuade the US to recognise its independence and even set up a military base on its territory.
Even before the first well has been sunk, violence had broken out. The Warsangeli, a clan in the Sanaag region that object to Range exploring in their territory, confronted geologists sent to take samples. Garowe Online, a website run by disgruntled émigré Puntlanders, reported that in March 2006 ten clan members were killed during a gunfight involving militiamen defending the oil seekers. Those militiamen, says a local source, work for Bogor, the former director who was telling me of his dreams for a new Dubai. A few months ago, he left Range to work as the adviser to Puntland's president Hirsi, who is also a relative. but not before he had sewn up the contracts that give Range, and Africa Oil, the sole rights to Puntland's mineral prospects. Bogor, Garowe Online's editor told me, is in effect Puntland's most powerful warlord.
Range's promotional YouTube video has been reproduced and mocked by opponents with the title "Oil Thugs" and the introductory line, "Mate, here's a candy, now give me your oil." They claim that many members of the provincial government (including the president) are shareholders in either Range or Consort, a company with opaque origins that held the original licence to develop the province's mineral resources. Range's exploration contract included a bonus payment of $20m to be made to Consort after it had drilled its fourth well. (Range has certainly ingratiated itself with Puntland's administration. It is paying to build a new airport in Bosaso, for example. But it denies that Bogor or any government ministers are shareholders in Consort, and says Range's shareholding structure was checked by the London stock exchange at the time of listing.)
President Hirsi told me that Range had helped to draw up the laws governing its own operations there. Any company that wanted to explore in the region, he added, must speak to Range first. And Range also employs its own private security men to protect its executives in the turbulent region of Puntland; which, Garowe Online claims, amounts to the company's own private army.
In the context of the new scramble for Africa's resources, there's nothing unusual about Range. There are plenty of small companies raising money to invest in chaotic states. Ironically, this is one consequence of the corporate do-gooding that has tied the hands of western oil majors in Africa and elsewhere. During the 1990s, NGOs attacked the secrecy of the large multinationals. But when BP announced that it would go public with its payments in Angola, the state oil company threatened to terminate its contracts. It is no surprise that avaricious local elites in many countries now prefer to deal with companies that slip under the activists' radar, or with China. When China's vice president toured Africa hunting for oil deals in 2006, his pitch was: "We won't ask questions."
Range's directors make no pretence. They want to find oil and sell themselves to a larger company, allowing them to retire as millionaires. In the meantime, they're risking everything on a drilling programme that could find oil—or disappoint people in one of the most impoverished corners of Africa. The directors won't be around to witness the aftermath of a big oil find. Oil's curse rarely falls on the men who find it, but always on the people who live above it.
