Somaliland’s Natural Resources & Energy Sector Hussein Abdi Dualeh Minister of Energy & Minerals

Somaliland Overview Somaliland had a stable democratic government for 23 years. Pro-development government. Adopted “open door” policy to petroleum and mining investment. Will consider bid rounds in awarding new oil blocks going forward. Attracting international E&P companies (e.g. Genel, DNO, RakGas, Ansan). New modern legal framework for mining & petroleum Offering competitive fiscal terms Small discoveries are likely to be commercially viable. Berbera port close to major basins and mineralized zones with direct access to major global shipping lanes.

Geological Setting Somaliland has favorable geological setting for hydrocarbon and mineral resources. Potential for world-class discoveries.

Hydrocarbon Potential

Regional Geology – Comparison with Yemen Geology of Yemen margin is similar to Somaliland prior to rifting in the Gulf of Aden. The similarities in fault trends on both sides is striking. Berbera basin is the continuation of the Bahalf graben before the extension phase. Yemeni basins contain 9 billion of reserves. Adjacent Somaliland basins have identical geology and potential. Yemen provides fast-track analogues. Major discoveries in East Africa.

Hydrocarbon Exploration Plays Key elements for generation and entrapment of hydrocarbon are present. Major sedimentary basins, source rocks, reservoir rocks, and structural & stratigraphic traps. Large oil and gas accumulations is highly likely in Somaliland basins. Southerly dipping Jurassic sequence of Gawan limestone overlying Daghani shale

Exploration Plays A working petroleum system is known to be present within Mesozoic to Tertiary sedimentary section. Presence of oil seeps at Dagah Shabel, Biyo Dader and many other locations. Oil shows on most drilled wells (e.g., Dagah Shabel, Dab Qua, Bandar Harshau, Nogal). Gahodleh shale Basal clastics of Adigrat sandstone

Potential Plays: Offshore Plays found in pre-rift (Jurassic & Cretaceous) and Oligocene-Miocene sequences include major roll-over anticline structures. Offshore play Somaliland

Potential Plays: Onshore – Berbera Basin Primary structural traps are rollover anticlines associated with growth faults. Berebra Basin Somaliland

Potential Plays: Onshore – Nogal Basin Nogal-1 well confirmed working petroleum system in Nogal basin Tertiary movement did not breach Mesozoic structures, and hence, still contain a considerable hydrocarbon potential. D&A Proposed Somaliland Nogal Basin

Mineral Potential

What is really special about Minerals in Somaliland? Geology of Somaliland records a very long history Contains crystalline rocks of Precambrian age. Contains Greenstone belt that can potentially host significant gold deposits Late tectonic uplift and erosion Exposes deeply buried mineral deposits Causes dispersions of metals in streams and rivers Creates diversity of mineral deposits at different levels of Earths crust

Mineral Potential Geological environment and indications of mineralization reveal minerals of economic significance are widespread Highly potential for the deposits of iron ore, manganese, platinum and gold-bearing veins. A number of known deposits of minerals used in industry such as lead, zinc, tantalite-columbite, tin, and quarts crsytals. Somaliland is highly prospective and under explored.

Bedrock Geology and Mineral Potential Bedrock geology of Somaliland emphasizing units important for metallic mineral deposits

Metallic Minerals are present The most attractive metallic mineral potential of Somaliland are: Iron ore, manganese, platinum, lead, zinc and gold-bearing veins. Tin, tungsten and molybdenum (Mo) Tantalite-columbite

Non-Metallic Minerals Very large resources of marble, limestone and dolomite A cement plant with an annual capacity of 300,000 tonnes has operated since 1987 in Berbera. Gypsum – huge deposit close to Berbera. Heavy mineral sands containing ilmenite, rutile, zircon titanite, and titaniferous magnetite. Gemstones including amethyst, aquamarine, emerald, garnet, opal, ruby, and sapphire. Gypsum, SE Berbera Amethyst

Conclusions Considerable hydrocarbons could be accumulated in Somaliland basins. Somaliland is highly prospective to host abundant deposits of base metals, precious metals, heavy minerals, rare earths, coal, non-metallic and gemstones. Companies with proven track record and adequate financial and technical capacity in their respective field are desired to invest and not start-ups.

SOMALILAND ENERGY SECTOR

Current Status Majority of population depends on traditional biomass (charcoal, wood) for energy. Total installed electric capacity is estimated at a measly 70 MW. Djibouti: 130 MW, Kenya: 1,698 MW, Ethiopia: 2,061 MW, US: 1,039,000 MW. Electricity generation is mostly done through diesel generators. Somaliland has one of the highest electricity rates in the world. $1.00 – 1.25 kWh, with an average of $.80/kWh. World average is $.15/kWh. Nearly 97% of power generation is done by the private sector.

Challenges in the sector Degradation of the environment because of the use of biomass. Lack of government regulations, a key to attract investment into the sector and organize it. Lack of access to capital, (need foreign investment). The economy cannot grow without affordable energy. Poverty reduction cannot occur without access to affordable power. Industrialization will not occur without affordable power.

successes Energy Policy passed in 2010. Electricity Bill developed with the help of USAID. Electricity Act is planned to be passed into law by early 2015. Once passed, will invigorate the sector and attract investment flow into the sector. Encouraged and promoted power companies to join forces to get economies of scale. Public awareness through energy forums to promote renewable energy use. Very potential for wind and solar power generation

Wind Energy Power Generation High wind speeds warrant developing wind power in Somaliland. Egal International wind energy pilot project: 5 x 20 Kw = 100 kw lead the way. Encouraged private sector to follow suit. Borama: 450 kw, Erigavo: 450 kw, Burao: 450 kw, Berbera: 60 Kw, Ainabo: 60 kw, Las Anod (planned).

Annual Global Solar Energy Production

Solar Power Generation Solar power generation could become a viable energy source. Pursuing a commercial grade pilot solar project to encourage the private sector. There is a limited use of this highly potential power source. Foreign investment interest in Solar is gaining momentum. Hybrid systems such as solar coupled with wind could be even more reliable power systems.

Investment Opportunities in the Energy Sector Huge potential in Somaliland for investors in the power generation sector. Investing in renewable energy projects such as wind and solar are viable investment proposition. Upgrading existing diesel generators with more efficient fuel oil powered ones provides another investment opportunity. Investment in a national grid that can eventually connect with the regional East Africa grid system is a high priority in Somaliland's energy strategy. Foreign investors can act as IPPs and sell generated power to local distributors. Government is willing to provide guarantees and implement a regulatory framework to protect foreign investment into the sector. Investment in exploiting Somaliland's coal deposits to generate power is also another investment opportunity for foreign investors. Investment in the power generation sector has a high growth potential that warrant investor attention.