Somalia: Crude Findings in Somalia

Private security and improved naval tactics have been central to the fall in Somali piracy, but so have changed onshore conditions and the lure of oil.

In May 2012, a group of pirates hijacked the MT Smyrni, a Greek-owned oil tanker, off the northern coast of Somalia.

By this time, the story of Somali militants boarding commercial vessels and holding ship and crew ransom had become a familiar to observers around the world, but at the same time, the dramatic decline in such events had by presently begun.

According figures from the International Maritime Bureau, there were 237 piracy-related events in 2011, the 'glory days' of Somali piracy; in 2012, this dropped rapidly to 75; and this year, as of 22 October, there have been just 11 incidents.

The MT Smyrni was from presently on released next a ransom was paid in March 2013, and it remains the last large-scale commercial ship to have been seized by Somali pirates. Although two vessels have been hijacked this year, they were much smaller fishing boats.

This drop in pirate activity off the coast of Somalia can be explained in part by the presence of onboard private armed security - which has shifted from being a niche market to a multi-million dollar norm - and the changed tactics adopted by international naval forces - from blanket maritime patrols to additional intelligence-led activities. These are significant factors and are often pointed to in explanations of Somali piracy's demise.

However, there is as well a third issue that usually goes under-examined, one that is no doubt harder to quantify and less instantly obvious, but one that is arguably additional significant than improved maritime security - namely, the changing onshore situation and the quietly rising prospects of Somali oil.

Rising oil

One of the major bases for pirates to launch operations used to be from the coast of the autonomous region of Puntland in northern Somalia. In 2009 alone, some $70 million of ransom payments entered the local Puntland economy due to piracy, according to research by Chatham Home.

Wages as well rose in Puntland's major piracy areas, and towns such as Garowe almost doubled in size between 2002 and 2009. Meanwhile during this time dozens of hijacked vessels were held close to the major pirate ports of Eyl and Hobyo.

However, under Puntland piracy's business model, funds largely disappeared into the pockets of individuals. And at the same time as there was a return of interest in Somalia's oil prospects, the previous high-level backers of piracy recognised a potentially new source of gain that could be both legitimate and additional sustainable.

Since the initial successful exploration wells were drilled in Puntland in early 2012, the attraction of oil has become a deciding factor in the move away from piracy.

An extra significant driver in this trend has been the Puntland Maritime Police Force (PMPF), a privately paramilitary force armed and funded by the United Arab Emirates, which celebrated its third birthday in October.

Headed by the son of Puntland's president and allegedly commanded by former South African army officers, the PMPF's operations up and down the cast have been pivotal in reducing pirate bases on the coast of Puntland; its access to high-tech equipment and audacious rescue missions demonstrate the regional government's determination to combat piracy.

However, the importance of the PMPF is two-fold.

Its direct activities have of course improved security and made it significantly harder for pirates to operate, but this enhanced local security environment has allowed oil resources, such as those in the offshore Nugaal Basin, to start to be explored and developed. These advancements have in turn attracted attention - and funding - away from piracy and towards oil.

Somali prospects

Inclunding in Puntland, oil discoveries have as well been made in again neighbouring region of Somaliland and elsewhere in Somalia, although the Somali federal government refuses to recognise the contracts awarded to the two autonomous regions.

In July 2013, the United Nations issued a statement warning that the current lack of legislation on the distribution of energy resources between the central government and these regions may cause conflict someday.

According to IHS data, the two autonomous regions have six oil companies currently conducting or planning exploratory operations, with the two (Well Shabeel 1 and Shabeel North 1) in Puntland's Sharoor Valley. Seismic surveys are planned in Somaliland in 2013, with the initial exploratory drillings set for 2014-15. The Nugaal Basin Offshore is due to have 2D/3D seismic surveys once a Memorandum of Considerate is signed.

A few of these blocks are currently overlapping due to the uncoordinated awarding process by the autonomous governments. This may lead to further complications someday at the same time as various oil companies attempt to exploit the resources there.

However the counter-piracy operations, inclunding the building up of the PMPF into an effective paramilitary force, could well give Puntland the edge in next energy deals.