Somalia to launch oil licensing round in December

CAPE TOWN, South Africa - Oil and gas companies interested in setting investments in Somalia will have an opportunity to bid from 2020, the Horn of Africa nation has revealed, Garowe Online reports.

Somalia will start plans to license oil and gas companies in December, a move aimed at revamping her economy which has been in shambles for three decades.

The country's minister for Petroleum and Mineral Resources Abdirashid Mohamed said he will announce in December plans to launch the bid process in 2020.

“We are presenting up to 15 blocks,” Mohamed told Reuters on the sidelines of an African oil and gas conference in Cape Town.

He said seismic data commissioned for the government was encouraging and indicated that the 15 blocks could contain around 30 billion barrels of oil.

This comes as the Somali federal government and its Federal member states have not yet agreed upon on ways of sharing the natural resources with deadlock over the licensing of international oil companies seeking to do extract and trade in oil resources in the country.

Ahmed emphasized the new blocks were far from the maritime boundary with Kenya that is currently the subject of a dispute at the International Court of Justice.

The two countries are engaged in a tussle over the Indian Ocean maritime border. So thorny has been the matter that Somalia opted for International Court of Justice resolution.

While President Uhuru Kenyatta is lobbying for out of court settlement, his Somalia counterpart Mohammed Farmajo insists ICJ is the most independent arbiter.

ICJ has scheduled June 2020 for submissions and hearing. Last week, Kenya's Foreign Affairs Principal Secretary Kamau Macharia accused Farmajo of escalating the standoff.

Mohamed said the planned oil mining will not be sabotaged by piracy incidents, adding that the Federal Government is keen to stabilize the region.

“Somalia was known before for piracy, terrorists, unrest and all that, but the federal government of Somalia is doing its best to stabilize the country,” Ahmed said.

According to him, the planned extraction of oil and gas will eradicate unemployment besides reducing organized crimes and terrorism in Somalia.

“Somalia has a roadmap we can follow after we produce oil, so there will be no (resource) curse here in Somalia,” he said, referring to a tendency among some resource-rich countries to suffer from economic stagnation.

Most oil companies left in 1991 after toppling of Siad Barre, a move that paved way for lawlessness and insecurity in Somalia. The country is also struggling to vanquish Al-Shabaab insurgents and inter-clan violence.

Last month, Dutch oil giant Shell and Exxon Mobil paid $1.7 million for the lease of oil blocks for 30 years. The two are some of the companies that left in 1991.

“Once all the legislation is done we hope they will come back soon,” Ahmed said, exuding confidence in the expansion of Somalia's economy through the oil industry.

The country is experiencing relative peace in some states like Puntland. UN-sponsored forces AMISOM are playing a major role in stabilizing the country after three decades of civil war.

GAROWE ONLINE