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Africa money somaliland hopes oil will replace goat dependence

Nov 1 Wanted: investors for small African nation with good oil and mineral potential - no seat at the United Nations but history of independence in rough neighborhood. The break-away nation of Somaliland is a tough sell but the announcement this week that serious hydrocarbon exploration is about to kick off there shows that oil talks, regardless of political status. For Somaliland, an internationally unrecognised state of 3.5 million people that declared independence from Somalia in 1991, it promises to be a game changer."We need to find a way to earn hard currency besides selling goats, sheep and camels to Arabs. This is the only way we earn hard currency now," Hussein Abdi Dualeh, the minister of energy and mining, told Reuters on the sidelines of an African oil conference in South Africa organised by Global Pacific & Partners. Ophir Energy Plc, Australia-based Jacka Resources and Genel Energy, which is headed by former BP chief executive Tony Hayward, are all about to start exploration in Somaliland. Dualeh said the investments would be worth tens of millions of dollars, small change in the global oil industry but a windfall to a government that only has a budget of $120 million.

Gas discoveries off Mozambique and Tanzania and oil finds in Uganda and Kenya have sparked a hydrocarbon scramble into previously unexplored parts of Africa. Oil companies often go where other investors fear to tread, including other unrecognized statelets such as Kurdistan."Oil companies are concerned about geology, not politics," Dualeh said.

He also said Somaliland offered investors something sorely lacking in anarchic Somalia: stability."We control our borders, we have a police force and military. We have had four governments come and go with democratic elections," he said. The territory has not exactly been an oasis of peace, however. Fighting erupted there in January after the leaders of the northern regions of Sool, Sanaag and Cayn decided to band together into a new state called Khaatumo.

Somaliland's troops have since clashed with militia fighters loyal to Khaatumo, with reports of dozens of casualties. And what about pirates?"The pirate problem is not off our coast, it starts in the Indian Ocean with Somalia. We have a nimble coast guard that does its job with limited resources," Dualeh said. If oil is discovered, Somaliland would also welcome the steady stream of revenue that would follow. Dualeh said livestock sales across the Red Sea to Saudi Arabia followed a seasonal pattern with sales peaking during the annual haj pilgrimage."We need to get stuff out of the ground. Selling livestock during the haj is not sustainable," he said.

Australia business activity weakened in sept survey

SYDNEY Oct 9 Australian business conditions weakened in September as retailers and wholesalers suffered from slack demand, while inflationary pressures remained very subdued, adding to the case for further cuts in interest rates. A monthly survey of around 400 firms by National Australia Bank found firms complaining of a high local dollar, tighter fiscal policy and softer commodity prices. As a result the survey's main measure of business conditions fell 3 points in September to stand at -3, some way below its long-run average. In contrast, the index of business confidence rose 3 points to stand at 0, reversing much of the fall seen the previous month. The two measures have been see-sawing for months with no clear trend emerging."The pull back in business conditions was led by particularly heavy declines in wholesale, retail and transport & utilities," said NAB chief economist Alan Oster.

"We expect to see one more rate cut in November, provided core inflation remains subdued, with the possibility of another in early 2013," he added. The Reserve Bank of Australia (RBA) cut interest rates a quarter point to 3.25 percent last week citing a slowdown in China, lower export prices and a high currency among reasons for the move.

Financial markets are pricing in around a two-in-three chance of a cut to 3 percent in November, and further easing to 2.75 percent or lower next year. The survey's measure of sales dropped 6 points to -3, while that for profitability eased 3 points to -5. Measures of future demand were also weak, with the index of forward orders falling 5 points to -7 in the month.

Employment was a shade softer, led by a pullback in the once red-hot mining sector. Mining giant BHP Billiton on Tuesday said it plans to cut an undisclosed number of jobs in iron ore, its biggest and most profitable business, as it tries to cope with weaker prices and higher costs. Yet overall mining employment conditions stayed positive, suggesting miners were still hiring but at a slower pace. Measures of inflation were benign with final product prices rising at the slowest pace since January. Input costs also eased, as did the wage bill. Official figures for consumer prices are due later in October and are expected to show underlying inflation remained near the floor of the RBA's 2 to 3 percent target band in the third quarter.