A dispute between Kenya and Somalia over their maritime border may affect offshore exploration for oil and gas by multinational companies in East AfricaThere is disagreement between the two coastal nations regarding the location of their boundary line in the Indian Ocean. At stake are their legal claims to sell rights for exploration of oil and gas and collect revenue from any discovery. In late August 2014, Somalia officially took Kenya to the International Court of Justice (ICJ) in The Hague because of the maritime border dispute. Somalia believes that the maritime border should extend in a southeast direction, in an area equidistant between the two states, while Kenya believes the line delineating water under its control should extend directly east of the land border.
While the dispute brought before the ICJ is about maritime borders, the real issue is control of natural resources and legal claims by the two countries to sell exploration rights. This long-term disagreement recently heated up after the discovery of crude in Kenya’s northwestern Turkana region in 2012. Since that time Kenya has licensed further exploration in other areas of the country. In addition to inland oil reserves, Kenya’s vast Indian Ocean coastline is now being explored for possible oil and gas reserves. It has attracted explorers including France’s Total SA (FP) and Anadarko Petroleum Corporation (APC) of the United States. Kenya is hoping to become the first oil exporter in East Africa and recently opened eight new geographic blocks for sale to various international corporations for exploration and development. All but one of these blocks is located in the maritime area contested by Somalia.
The contested border dispute not only threatens to dissuade corporations from potential investment and exploration, it could put previously signed contracts between Kenya and multinational corporations at risk. It is very possible that corporations will await a final verdict from the ICJ before beginning exploration and subsequent exploitation of purported offshore oil and gas reserves. Maritime boundaries are regulated by the United Nations Convention on the Law of the Sea and rulings by the ICJ on disputes between two or more countries often take years to resolve. A maritime dispute between Peru and Chile was originally filed at the ICJ in early 2008 and was only concluded six years later in early 2014.If the ICJ remains true to form, it will be many years before it issues a ruling on the maritime border dispute between Kenya and Somalia, potentially resulting in a loss of exploration, exploitation, development and revenue for both countries.