Somalia Aims for Offshore Production by 2020
BY MAREX
Somalia plans to begin producing oil and gas offshore for the first time within six years and is in talks with state governments about how revenue will be shared, according to Bloomberg. Petroleum Minister Daud Mohamed Omar said the country is proceeding tentatively on exploration to avoid creating new tensions at a London event this week.
Somalia is considering its first bidding round for oil blocks since 2009 as increasing stability begins to attract more foreign investors. The government is in talks with companies including Royal Dutch Shell Plc, Exxon Mobil Corp., BP Plc and Chevron Corp. about reactivating contracts in the country. Oil companies haven’t operated in the country since civil war erupted in 1991 and they were forced to declare force majeure.
While Somalia has no proven oil reserves, drillers are betting the country has a geology similar to that of Yemen, which lies across the Gulf of Aden and has 2.7 billion barrels of proven oil reserves. Somalia’s oil deposits may amount to as much as 110 billion barrels, according to a June report.
The results of seismic surveys are expected to be submitted to the government by the beginning of next year. The survey, completed at a cost of $37 million by Soma Oil & Gas Holdings Ltd., was finished without any security issues.
An oil and gas revenue-sharing bill has been drafted and is moving through consultations with the emerging federal member states, but Somali officials are unable to provide a timeframe for when the law might be passed. For now, the provisional federal constitution allows the federal government to award blocks and make deals with international oil companies after consultations with the states.
A UN monitoring group has recommended that no contracts with oil and gas companies be signed until “appropriate constitutional, legislative, fiscal and regulatory provisions had been clarified and agreed to by the federal government and its regional authorities.”
