Date: Thursday, 06 June 2019
The Federal Government of Somalia (FGS) on 20 May passed a new Petroleum Law setting out revenue-sharing measures between Somalia's federal and regional governments, a significant development towards offshore exploration activity. The same day, two Somali senators and a minister with diplomatic passports were denied entry to Kenya, the latest event in a long-running escalation in diplomatic disputes between the two countries.
We assess that Kenya likely refused entry to Somali government officials in retaliation for Somalia's passing its Petroleum Law, which is a progression towards oil exploration in blocks whose ownership remains contested between the two countries. The International Court of Justice (ICJ) has been arbitrating the delimitation of the contested 100,000-square-kilometre maritime area since 2014 and in February 2017 rejected the Kenyan government's appeal that a memorandum of understanding signed with Somalia in April 2009 precluded the court's involvement.
It is likely that Kenya intends to pressure Somalia into reaching an out-of-court settlement. Kenya issued exploration licenses for blocks L21, L22, L23, and L24 in 2012, which Somali authorities say lie within the disputed area. If the ICJ rules in favor of Somalia, Kenya may be contractually required to compensate companies it awarded the blocks to, including Eni Spa. An out-of-court settlement would likely help Kenya to avoid compensation payments while also removing the possibility of an ICJ ruling wholly in Somalia's favor. The Kenyan authorities have already exerted leverage over the FGS in recent months, which is likely to increase in light of the Petroleum Law. For instance, an emissary was sent to Hargeisa in April 2019 to establish a foreign mission in the self-declared independent Republic of Somaliland (Somalia), undermining the FGS's claims of sovereignty over the area. According to a leaked United Nations document, Kenya is also seeking to close the Dadaab refugee camp, home to around 250,000 refugees near its border with Somalia. The government of Kenya previously announced the closure the camp in May 2016, but the High Court blocked the directive in 2017.
The Kenyan government is likely to continue delays to aircraft arriving in the country from Somalia as part of this strategy. Travel between the two countries is likely to face continued delays in transit; on 10 May, Kenyan authorities ordered all flights from Somalia to stop at Wajir Airport in northeastern Kenya to undergo security checks, disrupting air travel. Kenya is also likely to impose more stringent visa requirements on Somali nationals seeking to enter Kenya, particularly representatives of the FGS.
Indicators of changing risk environment