Political tensions dent Comoros energy ambitions
Indian Ocean nation hopes to repeat the offshore successes of neighbouring Mozambique
The Comoros has been called "the Perfume Islands" for centuries due to its success at cultivating the rare ylang-ylang essential oil, but exploration activity suggests the tiny volcanic archipelago could soon become better known for less-sweet smelling commodities—oil and gas.
After a series of false starts, at the end of 2018 the Indian Ocean archipelago nation—made-up of Anjouan, Moheli and Grande Comore—edged closer to actual hydrocarbon exploration after Tullow Oil agreed to take a share in offshore Blocks 35, 36 and 37.
The deal, given government consent, would see Discover Exploration, an African-based E&P company, acquire the entire share capital from current partner Bahari Resources and retain a 65pc stake. Tullow would then hold the remaining 35pc and lead as operator. If the agreement is finalised then 3D seismic work conducted by Tullow will begin this year, the first ever in the Comoros Islands.
Since the French introduced ylang-ylang in the 1700s, the islands' economy has been dominated by the delicate yellow flowers, a key ingredient of Chanel N°5 and many other perfumes. Interest in the oil and gas potential of the islands' territorial waters only began in earnest in 2012 with the arrival of Discover Exploration and Bahari Resources.
Mayfair-based deepwater firm Discover Exploration was founded by former management from the now defunct Cove Energy, which was sold in August 2012 to PTTEP for $1.9bn—principally for its 8.5pc stake in the huge Rovuma Area 1 assets found offshore northern Mozambique.
Rovuma Area 1's Prosperidade field and the surrounding gas discoveries at Orca, Lagosta, Atum, Golfinho and Tubarão are among the world's largest gas discoveries of the last 20 years.
Discover then embarked on raising investment and applied for an exploration license in offshore territory adjacent to the Mozambique blocks. In 2013, Discover Exploration and Bahari succeeded in signing the archipelago's first production sharing contract.
A 2D seismic survey was then undertaken in 2014. The ERCE, a UK-based energy consulting group, estimates that two partly stacked prospects in Blocks 35,36 and 37 contain 7.1bn barrels of oil and 49tr cf of non-associated gas.
The Rovuma Basin Areas 1 and 4, now operated by joint venture consortiums headed by Anadarko and Eni, have shown the potential for natural gas discoveries in neighbouring provinces. Major natural gas finds were first detected in Area 1 in 2010 at the Windjammer, Barquentine and Lagosta wells in the Prospectidade complex. Later, further discoveries were made in Tubarão in 2011, followed by the Golfinho/Atum complex in 2012 and Orca in 2013. In total, Area 1 is estimated to hold 75tr cf.
At Area 4, the closest offshore block to Comoros waters, major discoveries were made at the Coral and Mamba complexes (called Prospectidade when it stretches into Area 1) in 2012, adding another 75tr cf to reserves. An FID on the Mamba field is expected in 2019, with potential start-up to begin by 2024.
Despite the exploration potential, in a region best known for its beach holiday destinations, the Comoros Islands is a curious outlier. A fractious history of political upheaval has seen over 20 coups since independence.
A referendum last year on presidential term length organised by President Azali Assoumani ended a power-sharing agreement between the three islands that had ensured a fragile stability since 1997, when intra-island tensions saw Anjouan and Moheli both attempt unsuccessfully to re-join the French Republic. The result enables Assoumani to extend his reign as leader of the archipelago and he has since called a snap election for the first quarter of 2019. Previously he would have only permitted one five-year term, but will now be able to stand for a further two.
Hostilities between the islands worsened following the result and triggered sporadic violence. Anjouan's governor, Abdou Salami Abdou, and former Comoros president, Ahmed Abdallah Mohamed were both placed under house arrest in October on charges of corruption and inciting unrest.
"Political and social tensions are high after the constitutional referendum and relations between Grande Comore and Anjouan are on a knife edge. Even with Governor Abdou Salami Abdou imprisoned, we do not rule out a major crisis requiring an AU intervention within the next six months. In this case, any future oil exploration would be reassessed until the situation calms," says Indigo Ellis, Africa Analyst at Verisk Maplecroft, a global risk consultancy.
Lack of transparency
Critics also point to governance gaps highlighted by past natural resource scandals. In 2012, a case was brought to the International Chamber of Commerce after Boulle Mining Group, a mining conglomerate, claimed the vice president had "signed a contract … which commits the resource[s] of the country for at least 45 years." Fortunately for the government, and ostensibly the islands' population of around 795,000, the ICC ruled against the group in December 2015.
"The Comorian government is often accused of acting in an opaque manner in the development of petroleum activities, particularly after the Boulle Mining case," says Ellis. The confusion and lack of clarity caused by the case, and the current political situation, could combine to deter potential investors.
The government passed a Petroleum Code in December 2012 to help regulate exploration, but the country's continuing struggles with corruption and weak institutions were highlighted in 2016 when President Azali Assoumani dissolved the High National Anti-Corruption Commission on the grounds of inefficiency. To date no alternative has been passed.