PESA: Fusion Provides 200,000 km2 Study For New African Acreage Chance
PESA News, April/May 2003, Issue Number 63.
Published: 04.02 - 2015 18:36Printer version    
Petroleum Exploration Society of Australia (PESA)

Fusion Provides 200,000 km2 Study For New African Acreage Chance
- Saharawi's future hangs in the balance

Perth based oil and gas exploration company Fusion Oil & Gas has signed an
agreement with an African government which could see it acquire up to 60,000
km2 of unexplored offshore acreage after it agreed to carry out a study to
help determine the potential of more than 200,000 km2 of virtually unexplored
acreage to get, what could be, a substantial foothold into the region.

But there is a catch. The government Fusion has negotiated the deal with, the
Saharawi Arab Democratic Republic (SADR), represented by the Polisario
independence movement, does not have control over its own lands ever since its
former colonial power, Spain, withdrew in 1976.

The Spanish withdrawal prompted an invasion by neighbouring countries Morocco
and Mauritania, forcing the Saharawi people to live in refugee camps in
Western Sahara and neighbouring Algeria. The future of the people of the
Western Sahara has been hanging in the balance to this day.

Mauritania later withdrew from the conflict. But Morocco's claim for
sovereignty has not been recognised internationally and is being contested by
the Polisario movement. The invasion prompted the Polisario to wage a
guerrilla war which ended in a cease fire in 1991. The United Nations has been
involved in trying to negotiate a settlement to the dispute ever since the
cease fire was declared.

Fusion Oil Managing Director, Alan Stein, said Fusion had become involved in
Western Sahara after it decided to seek further opportunities in the region,
following its entry into Mauritania in 1997.

"In 1999, after having looked to the south of Mauritania in Senegal, The
Gambia and Guinea Bissau we began looking to the north where there was a big
void on the map", Stein said. "We approached the Foreign and Commonwealth
Office (FCO) in London and asked who do we talk to?" Fusion's London based
Chairman, Peter Dolan, was encouraged to talk to the Polisario's UK
representative, Brahim Mokhtar, to gain a further understanding of what was
happening in the region.

"I don't think advising us to talk to the Polisario was formal FCO policy",
Stein said. "However, what we have observed is that while formal policy is,
not surprisingly, supporting the American position, I think you will find
within the government of the day in the UK, and within the Civil Service, a
hell of a lot of sympathy and support for the Saharawi people. In the world of
realpolitik, however, legal and moral considerations alone do not always carry
the day in terms of official government policy.

Mokhtar explained the Saharawi struggle, which Stein said was a real 'eye
opener' for the Fusion team and, after the meeting, it was decided to dig
deeper into the issue and remain in touch with Polisario. "At the time of our
first meeting all we said was we'd like to talk to you about the offshore
acreage when everything is settled, since it is not appropriate right now", he

In the meantime, Fusion prepared a brief report outlining the history of oil
and gas exploration offshore Western Sahara because, he said, Polisario knew
little about the petroleum industry. "We kept in touch and every now and again
would have a bit of a chat about how things were going", Stein said.

In October 2001 the Moroccan government, through its oil company ONAREP,
controversially issued reconnaissance licenses in October 2001 to two
multi-national oil companies, Kerr-McGee and TotalFinaElf to explore in the
same area.

The move prompted the UN Security Council to investigate the legality of
Morocco's actions. But in a vague finding, the UN's legal counsel, Hans
Corell, reported on January 29th, 2002, that licensing the Western Sahara
aquatory violated international law if the interests of local inhabitants were
not taken into consideration prior to drilling and production.

"If exploration and exploitation activities proceed in disregard of the
interest and wishes of the people of Western Sahara, they would be in
violation of the international law principles applicable to mineral resource
activities in non-self governing territories", Corell said.

The companies awarded contracts to perform the collection of seismic data to
Norwegian company TGS-NOPEC, which also became embroiled in the controversy.
TGS-NOPEC issued a press release dated June 7th, 2002, saying it had no
agreement to participate in, or profit from, any exploratory drilling or any
production or exploitation of mineral resources of the area. Citing the UN
legal decision, the company said the contracts for "oil reconnaissance and
evaluation" did not entail exploitation or the physical removal of the mineral

According to a March 6th, 2003 news report, TGS-NOPEC announced it would not
pursue any further seismic work in Western Sahara. TGS-NOPEC's Chief Financial
Officer, Arne Helland, reportedly said that, with hindsight, the company
should not have "been so imprudent as to shoot 15,000 km of seismic" in waters
claimed by Morocco. Helland said TGS-NOPEC would not now carry out any
follow-up 3D seismic in the area, even if there was a need for such work.

In the meantime, TGS-NOPEC was about to hand over all data gathered to Onarep
and the two oil companies, having completed the survey last month, the report
said. A TGSNOPEC spokesperson confirmed to PESA News that Helland attended the
meeting but could not corroborate all of the statements attributed to him in
the report. She said TGSNOPEC was planning to issue another press release
about the issue, but this was not available as PESA Newswent to press.

Australian based Polisario representative, Kamal Fadel, said he was surprised
when the companies announced they had been awarded licenses to undertake
exploration work in disputed waters. "This is a territory that is still on the
UN list as a non self governing territory, it is a decolonisation issue and
the UN mission is present in the territory", Fadel said. "No country in the
world recognises Morocco's sovereignty over Western Sahara."

Fadel said the companies were "taken in" by Morocco's political attempts to
"legitimise" its annexation of Western Sahara. "It is also an attempt to get
two important countries involved in the territory having business interests
and that will help their [Morocco's] case in the UN, and also make their
occupation of the territory a fait accompli."

Fadel said Polisario had written letters of protest to TotalFinaElf and
Kerr-McGee, and, as far as he was aware, they ignored Polisario's protests. "I
hope that those companies, and the countries behind them, have the wisdom to
understand that this is a case of decolonisation", he said. "This is our
people's right to self-determination and we will not give up that right, and
that this issue will have to be solved in a just, legal and fair manner
because any other solution will not be lasting."

(Photo caption: "This is not a contest between Fusion and other oil companies.
This is, and always has been, a struggle between the Government of Morocco and
the Saharawi people." Fusion Oil Managing Director, Alan Stein)

He said Polisario was not against foreign investment in Western Sahara, which
was "quite rich" in mineral resources. "We are not against companies being
involved in the future of Western Sahara, but it has to be done with the
people who have a right to deal in the territory, Saharawi's themselves, not
with Morocco", he said.

Stein said Morocco's decision in 2001 to award reconnaissance licenses in
offshore Western Saharan territory changed everything. "The decision by the
Moroccans to license that acreage caught the industry completely by surprise",
Stein said. "I genuinely believe there was an understanding that this was an
area that was off limits, it was a disputed zone." He said the Polisario
decided to make a counter claim on the same area.

"After looking at the international law in relation to non self governing
territories we decided that it wasn't appropriate at this time to make a
counter claim in the form of an exploration licence", Stein said. This was
despite the Polisario having a stronger case to do so than the Moroccans did.
"We entered into a technical co-operation agreement [with the SADR] to make
sure that we were doing the right thing ", he said. "We agreed to work
together and any licenses would be awarded once the situation was resolved."

The agreement provided for Fusion to carry out detailed geological and
geophysical studies and evaluation of the area, extending from Mauritania in
the south to Morocco and the Canary Islands in the north, covering an area of
about 200,000 km2, over a 16 month period.

The technical study, which will become the property of the SADR, is expected
to be finished in August 2003. Stein said it will give Fusion the to right to
apply for some exploration acreage for a period of time. "Should we choose to
do so we can make up to three license applications, for areas of up to 20,000
km2 each", he said. "The applications will then be ratified by the government
on the understanding that they will become effective when there is a
resolution to the political situation."

In undertaking the study, Fusion has had to dig deep in collecting data from a
wide variety of sources. "We have collected a very wide and disparate set of
technical data that has been acquired by oil companies, service companies and
by academic institutions", Stein said. "That ranges from conventional marine
seismic, academic seismic research cruises, and even seismic acquired by the
US Navy which has been integrated with previous onshore and offshore drilling
results, satellite oil seepage data, satellite gravity data, geological
reports, and onshore satellite images. Given our experience elsewhere along
this coastline we also have a great deal of regional knowledge which can be
brought to bear in addition to the basic data."

Stein was reluctant to discuss details concerning the cost of the study
however he said it is a fairly substantial investment, but one which is within
Fusion's means and was justified in terms of the upside potential.

He said the two exploration licenses Fusion is involved with in Mauritania
covered an area of about 20,000 km2. "We have a 3% and a 6% interest in PSC A
and PSC B where there have now been two deep water oil discoveries ", he said.
"We have effectively built the company around those interests."

"We are now talking about the possibility of up to three exploration licenses,
offshore Western Sahara, together covering three times as much area, where
Fusion will have an initial equity of 100%, providing the flexibility to drive
the whole programme forward", he said. "Now there are still huge technical
risks because this is an un-drilled frontier with very little data but that is
okay, we can address those issues once we get into the work programme."

Fadel said Polisario had been trying to get governments around the world to
recognise the status of Western Sahara as an independent country and expose
what is happening in the territory to the wider community.

"We are trying to build relations of friendship, understanding and
cooperation, not only for now but also for the future when Western Sahara gets
its full independence", Fadel said. The SADR is recognised by 74 countries and
the African Union, formerly the Organisation of African Unity.

The UN established the UN Mission for a Referendum on the Western Sahara
(MINURSO) in the disputed territory, and for the past 12 years, according to
Fadel, has spent more than $US500 MM ($840 MM) trying to organise a referendum
to let the people decide their fate. But Morocco has continually stalled the
referendum process, and in the meantime has been pouring its own people into
the region to participate in the referendum when, and if, it happens.

"The referendum has been delayed and obstructed by the Moroccans for many
years now because they fear the verdict of the Saharawi people, and the UN has
not been very effective in putting pressure on Morocco to allow the referendum
to take place", he said. In the meantime, the Saharawi have been held captive
in occupied territories by Moroccan forces, or have been living in refugee
camps near the Algerian town of Tindouf, ever since their country was invaded
in 1975.

But after waiting 27 years for a democratic solution to determine the future
of their country, their patience is wearing thin. "It is frustrating, it is
disappointing and our people's patience is running out", he said.
"And at the same time as our people are waiting in the refugee camps in dire
conditions, our people in the occupied territories have been subject to human
rights abuses by the Moroccans."

Up until now Polisario has been prepared to cooperate with the UN to "give
peace a chance". "But it is high time the UN did something because we cannot
just wait there indefinitely", he said. "Our military people and our people in
general are really putting pressure on the [Polisario] leadership to do
something because what is happening now is not good. They are saying that if
the UN fails we have to resume military action."

The mandate for the UN mission in Western Sahara is due to expire on March
31st, 2003, and the Security Council is expected to decide its next course of
action. "We are hoping that the UN will decide to go ahead with the referendum
because there is no reason for them not to do so", Fadel said. "In case they
declare they can't do that, and they are withdrawing from the territory, then
we will have to do something ourselves."

Another option currently on the table is a proposal by the UN's peace
negotiator, former US Secretary of State, James Baker, to give wide-ranging
autonomy for Western Sahara under Moroccan sovereignty. But this proposal has
not impressed the Polisario. "Our position is that we reject utterly that
option", Fadel said. "If it were to be considered by anybody, we reject it, we
will not accept it because it is illegal. It is in violation of UN resolutions
and of the practice of decolonisation, and because it is against the wishes of
the Saharawi people."

Fadel called on the UN to take a hardline stance on Morocco to finally resolve
this issue or the consequence could be a return to violence. "The UN Security
Council must indicate clearly to Morocco that it has to allow the process of
organising the referendum to take its course, because anything apart from that
will create instability and havoc in the region", he said.

Stein said he believed the fight over the control of Western Sahara was not
simplistically about legality or morality. "There is an element of
geopolitical expediency", he said. But Stein emphasised that Fusion was not
involved in the geopolitical machinations surrounding the issue.
"Fundamentally for Fusion, this is not a political issue, although we take an
interest in the political struggle, we are not part of the political process",
he said.

"We do not see this as a contest between Fusion and other oil companies. This
is, and always has been, a struggle between the government of Morocco and the
Saharawi people. We have chosen to provide technical assistance to the
Saharawi people. If that means we end up being able to pursue the relationship
through to taking an exploration license, then so be it. If that opportunity
does not materialise, then so be it also."

He rejected a suggestion that the company was involved to raise its profile.
"I don't think there has been much profile for Fusion in doing this", he said.
"If anything, we are exposing ourselves to an aspect of political risk that
companies wouldn't normally want to be exposed to."

"The worst that can happen is that we will have made an investment in
deepening our understanding about how the petroleum geology of this whole
coastline works while being comfortable in the knowledge that we have acted
with integrity" Stein said. "If, as we fully expect, there is a just
resolution that allows the Saharawi people to administer their own territory,
then there is an opportunity for us to explore a whole new province and we
will have delivered a game changing opportunity to our shareholders."

(Photo caption: "It is high time the UN did something because we cannot just
wait there indefinitely.", Australian based Polisario representative, Kamal
Kerr-McGee Responds

"On October 4, 2001, Kerr-McGee du Maroc Ltd, an affiliate of Kerr- McGee
Corporation, and ONAREP, the Moroccan state oil company, entered into a
Reconnaissance Permit by which Kerr-McGee undertakes to perform geological and
geophysical studies in a maritime area offshore Boujdour.

The reconnaissance permit allows us to conduct research activities, including
seismic surveys. We are currently continuing our research activities, which
include processing seismic data. The UN Under- Secretary for Legal Affairs has
confirmed that we acted lawfully in contracting with Morocco. Neither the
United States nor the United Nations recognizes any other administrative
authority or government in that territory.

Kerr-McGee continues to support the ongoing efforts of the United Nations to
find a permanent and amicable solution to the Western Sahara issue. We hope to
be able to make a contribution to the development of this area and its people.
It would be inappropriate to speculate about what the future may hold in this

Debbie Schramm
Director - Corporate Communications
Kerr-McGee Corporation

TotalFinaElf Responds

"The contract dated October 2001 between the Moroccan agency ONAREP and
TotalFinaElf aims at evaluating the possible petroleum potential offshore
Western Sahara.

The United Nations Under-Secretary-General for Legal Affairs, after a thorough
review, has made a statement to the Executive President of the Security
Council on January 29th 2002. According to this statement, this contract is
not illegal under prevailing practice of States or international law.

The Under-Secretary-General for Legal Affairs stated also that it could be
considered as unlawful in case of development decision, if it did not take
into account the interests and will of the Saharawian people. Morocco and
Polisario representatives accepted this statement publicly.

TotalFinaElf's operations are therefore in full agreement with the
international law and the positions of the political stakeholders of the area.
It is clear that, in case of discovery, the situation could have to be
re-examined in close connection with the United Nations.

We are currently performing reconnaissance and seismic activity as
contemplated under the reconnaissance permit we have with ONAREP."

Patricia Marie
Relations Presse

To view the complete UN legal opinion letter click onto:

PESA News contacted representatives from Onarep to comment on this article,
but they did not respond.

PESA's Western Sahara acreage map:

Forwarded by:




Morocco occupies the major part of its neighbouring country, Western Sahara. Entering into business deals with Moroccan companies or authorities in the occupied territories gives an impression of political legitimacy to the occupation. It also gives job opportunities to Moroccan settlers and income to the Moroccan government. Western Sahara Resource Watch demands foreign companies leave Western Sahara until a solution to the conflict is found.
EU Court cases on Western Sahara for dummies


It's not easy keeping up with all the different legal proceedings relating to Western Sahara. For the sake of clarity, here's an overview of the five different cases at the Court of Justice of the European Union.
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