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From Oil Creek to Somalia's Potential
By Mohamed Mukhtar Ibrahim
Wednesday August 23, 2023

As the sun rises on August 27, 2023, it marks not only a new day but resonates with historical significance. Exactly 164 years ago, the unassuming railroad conductor, Colonel Edwin Drake, struck oil in Oil Creek near Titusville, Pennsylvania. Little did he realise that this modest achievement would set the stage for a global industry that now powers our contemporary world. Much like the pioneering spirit that marked that historic day, Somalia now stands at a juncture of its own, contemplating the exploration of its oil potential.

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Oil, the lifeblood of modern civilisation, has driven industries, facilitated trade, and sculpted economies. Its roots trace back to a pivotal juncture in history – a chapter that I find both captivating and personally relevant. The narrative begins on August 27, 1859, as petroleum gushed from the first wells in what we now know as Oil Creek near Titusville, Pennsylvania. This seminal moment marked the inception of an industry that would revolutionise the global landscape. Colonel Edwin Drake, an unconventional figure in the oil story, was hired by the Pennsylvania Rock Oil Company to conduct the drilling. His title of "Colonel" was a clever ploy designed to impress locals. Despite having no military background, Drake's successful drilling of a 69-foot well on a salt dome rock formation yielded 15 barrels of oil daily.

Fast forward 164 years and the echoes of Drake's legacy reverberate in unexpected corners of the world. Historically known for its geopolitical challenges, Somalia is contemplating exploring its oil potential. Much like Oil Creek, Somalia's journey into the realm of oil comes with its complexities and opportunities.

As Somalia grapples with the prospect of tapping into its oil reserves, it faces the spectre of the "resource curse" that has plagued other nations. Countries vulnerable to experiencing the resource curse often share a set of distinct characteristics. Weak institutional frameworks, limited revenue sources, and pre-existing economic instability. Corruption, lack of transparency, and social inequality compound the risk, potentially leaving only a fraction of the population benefiting from the newfound riches. Inadequate investment in human capital development, a need for more regulatory frameworks, and political instability can hinder the responsible management of resource revenues, contributing to an environment ripe for the resource curse to take hold.

Moreover, the historical context of foreign interference, environmental vulnerability, and dependence on narrow industries can further amplify these nations' challenges. Without comprehensive strategies to address these vulnerabilities, countries may find themselves ill-equipped to navigate the complexities of newfound resource wealth, ultimately perpetuating the cycle of underdevelopment and inequality that the resource curse embodies.

Navigating the Path Forward: Somalia's Imperative

As Somalia stands at the crossroads of resource exploitation, it can learn from the mistakes and successes of other nations that have grappled with the resource curse. To avoid the pitfalls that can accompany newfound wealth, several strategic steps are crucial:

1. Political Agreement

Bringing together political stakeholders, especially the Federal Government and Federal Member States, to form a consensus on resource management is paramount. A united approach can minimise internal conflicts and ensure that the benefits of oil reach the population.

2. Finalizing the Provisional Constitution

A clear and comprehensive legal framework is essential for regulating the oil sector. Finalising the country's constitution can provide the foundation for effective governance and resource management.

3. Master Plan

Developing a well-structured master plan for resource utilisation is vital. This plan should encompass economic diversification, infrastructure development, and social welfare programs to ensure sustainable growth.

4. Strengthening the Regulatory Regime

Robust regulatory mechanisms are necessary to ensure environmental, safety, and ethical standards compliance. A strong regulatory framework can prevent resource mismanagement and corruption.

5. Introducing Necessary Laws and Institutions

Enacting laws that promote transparency, accountability, and equitable distribution of oil revenues is crucial. Establishing institutions capable of overseeing these processes is equally important.

6. Private Sector Participation

Empowering Somali companies to engage in the industry actively can bolster local economic growth and foster a sense of ownership and responsibility over the nation's resources.

7. Developing the Required Skills

Investing in education and vocational training to develop a skilled workforce is essential. This will empower Somalis to participate in all aspects of the oil industry actively.

8. Increase Capacity for Negotiation: Getting skilled negotiators, who understand the industry's intricacies, can ensure that resource contracts are fair, transparent, and mutually beneficial.

9. Active Civil Society

Encouraging civil society participation and providing platforms for public engagement can ensure that the population's interests are represented and safeguarded.

Conclusion

The journey from Oil Creek to Somalia's potential is a testament to the transformative power of oil. As Somalia contemplates harnessing its oil resources, it must heed the lessons of history and actively address the challenges plaguing resource-rich nations. By prioritising transparent governance, investing in human capacity, and fostering stakeholder cooperation, Somalia can turn its oil wealth into a force for positive change. The parallels between Colonel Edwin Drake's unconventional journey and Somalia's future potential serve as a reminder that deliberate choices and responsible stewardship mark the path to prosperity.

Mohamed Mukhtar Ibrahim
Former Minister of Petroleum and Mineral Resources of the Federal Government of Somalia
[email protected]



 





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