In a sign of a growing rift between Somalia's semi-autonomous Puntland region and the country's interim government, Puntland's president says he will not recognize a proposed oil law that nullifies any exploration deals struck after 1990. VOA correspondent Alisha Ryu reports from our East Africa Bureau in Nairobi.

The Somali interim parliament in Baidoa is expected to pass the controversial bill this week, which would have a direct impact on Puntland. 

Two years ago, the Puntland government signed a lucrative deal with Australia's Range Resources, giving the company exploratory rights to minerals and oil reserves in region. The clause in the interim government's oil bill nullifying any post-1990 deals would automatically cancel that deal and others being negotiated. 

Puntland officials say they are concerned that the bill will divert power and potential wealth away from the region.

Speaking on behalf of Puntland's president, Mohamed Adde Muse, Chief of Cabinet Aidarus Osman Yusuf tells VOA that the president is willing to share the region's wealth with the Transitional Federal Government (TFG) in Mogadishu.  But he rejects the interim government's position that it owns Puntland's natural resources.

"The position of the president of Puntland is that we are recognizing, of course, the federal system of Somalia and the federal government," he said.  "But this is the right of the Puntland states to have such agreements with companies.   When we reach the level of production, then, we have to deal with the government.  So, we agree on that issue." 

Interim Somali President Abdullahi Yusuf Ahmed (R) with his PM Ali Mohamed Gedi during a media briefing in Mogadishu, 09 Jan 2007

The prime minister says even a deal interim President Abdullahi Yusuf recently concluded with a Chinese company to explore for oil and gas in Puntland is subject to the new law.

In an interview with Reuters News Agency, the head of Puntland's Department of Minerals and Energy, Hassan Osman Mahmud, angrily warned that his government may end its relationship with the interim government in Mogadishu, if parliament passed the bill.

In 1998, seven years after Somalia descended into factional warfare, Puntland declared autonomy with a view to reunite with southern and central Somalia in a federalist arrangement with a stable government in Mogadishu.

Since mid-July, Puntland has had 250 delegates attending a government-hosted national reconciliation conference in Mogadishu, aimed at ending the civil war and unifying the country.

But Nairobi-based political analyst Barak Muluka says he believes Puntland and Somalia are moving further apart than ever.

"Somalia, in terms of stability, is very far from a peaceful settlement," he said.  "We are going to witness external forces and interests at play because there have been British and Australian interests in the oil concerns in Puntland.  Meanwhile, the TFG is not going to want to let go because this [oil] is a vital resource."

The relationship between Somalia and Puntland began deteriorating two months ago, following Interim Prime Minister Ali Mohamed Gedi's declaration that a fishing deal the Puntland president had signed with Yemen was not valid, because it did not have the interim government's consent.