Cracks emerge as Somalia signs mega oil deal with US based firm

MOGADISHU, Somalia - Major differences emerged on Saturday when Somalia announced the unprecedented signing of a major oil deal with a US firm, a move which directly contravened a decree sanctioned by outgoing President Mohamed Abdullahi Farmaajo, leading to questions and cracks.

In August last year, Farmaajo signed a decree banning state institutions from penning deals with other state co-operations or bilateral agreements with other nations, noting that the country ought to wait until elections are completed.

Oil and Petroleum Minister Abdirashid Mohamed Ahmed noted that Somalia signed sign production-sharing agreements with the Texas-based Coastline Exploration Ltd, terming the move as a "victory" to the Horn of Africa nation which is battling with instability.

"We are pleased to announce that we have signed 7 Production Sharing Agreements with Coastline Exploration Ltd. It is a victory for the Somali people.

I thank the President of FGS for supporting the process and encouraging us to complete this task," he said in a tweet.

On its website, the company's Chief Executive Officer Richard Anderson noted that Somalia has unexplored oil potential, adding that the company was honored to be given the opportunity for future development of the Horn of Africa nation.

"We are honored and excited to be part of its future development. The Government of Somalia and the Ministry of Petroleum have spent a great deal of time and effort to ensure the country has the proper legal and administrative infrastructure to support oil and gas exploration with the passing of the Petroleum Law, adoption of the Revenue Sharing Agreement among the Federal Government and its Members States and the establishment of the Somali Petroleum Authority to provide continuing support for the anticipated growth in the sector," he said.

Jake UIrich, Coastline Chairman added:" Revenues from the discovery of commercial quantities of hydrocarbons could be a major positive for Somalia from which the government could finance investments in education, infrastructure, healthcare, and other vital services, which will benefit all of the people of Somalia, including women and minorities, by helping provide for continued economic growth and improving the standard of living."

But no sooner had the minister announced the grand deal than the office of Prime Minister Mohamed Hussein Roble dismissed the deal, terming it completely unnecessary. The PM said the deal was illegal and contravenes the basic laws of the country.

"The alleged production sharing agreement purportedly signed by the Minister of Petroleum with a foreign entity regarding Somali oil reserves is illegal, unacceptable since it wasn't done through legal avenues," he said. "I will take all appropriate measures to protect our national resources."

The PM statement basically meant that the matter wasn't discussed in the cabinet as part of the customs of the country. Roble has often differed with Farmaajo throughout his tenure in office and this wouldn't have been an exception.

But even before he released the statement, Villa Somalia dismissed the agreement, terming it " null and void". In a statement, Villa Somalia said the minister has not consulted with the president. But in his Twitter post, the minister thanks Farmaajo for “supporting the process”.

"The Presidency FGS hereby declares nullification of Petroleum pact signed by the Minister on behalf of FGS. The deal contravenes Presidential Decree 7/8/2021 which bans the inking of deals during elections so as to protect public resources from exploitation during the elections," read the statement from Villa Somalia.

In an interview with The Voice of America Somali Service, Petroleum Minister Engineer Abdirashid Ahmed said President Farmaajo knew he was signing the oil exploration agreement. He alleged that Farmaajo may have “backtracked due to social media pressure”.

The minister confirmed the agreement was signed on February 15. He said the seven oil blocks mentioned in the statement locate in Galmudug, Southwest, and Jubaland. He also disclosed that a $7 million signing-on fee will be deposited into the government accounts within a month.

Coastline Exploration Ltd, formerly known as SOMA OIL and GAS, has relocated to Houston, Texas, the United States after a lawsuit was filed in the United Kingdom. Founded in 2018, Coastline Exploration Ltd has no prior experience working in the hydrocarbon industry, per sources.

GAROWE ONLINE