VENTURES AFRICA The Somalia government has called back oil companies with exploration licences two decades old, in the hope of discovering oil and gas in line with a recent wave of East African finds.
The government has sent out invitations to international companies who held exploration licences prior to the outbreak of civil war in the country in 1991, offering them a re-entry into the country for exploration purposes.
Such companies include BP, Chevron and Royal Dutch Shell.
Senior advisor to the Somali Ministry of Energy Abdullahi Haider claims interest in the international oil community is high, telling Reuters at a conference in London today: “I’ve seen so many people who are very much interested like Shell, like Chevron. I’ve met them here and they expressed very high interest”.
Haider also confirmed that while the government would be accepting new applications for exploration licences, those companies with existing licences from prior to the civil war will come first: “They will be given priority”, he told Reuters.
The government will be opening a new wave of licencing in early 2013, inviting applications from new companies for exploration of both onshore and offshore blocks in Somalia. This is in addition to the decades old licences which the government intends to honour.
However, Somalia hopes to renegotiate the terms of the old licences. In the first place, the old licences were all based on royalty agreements, which the government now wants to exchange for production-sharing agreements. As such, interested parties having pre-1991 licences are invited to commence negotiations in the hope of agreeing new terms beneficial to both parties.
The Somali government in this move is clearly hoping to capitalise on the wave of oil and gas discoveries happening up and down the eastern coast of the continent. Kenya, Tanzania and most recently Mozambique have all recently learnt of substantial reserves of oil and natural gas – prompting a bidding war amongst international oil companies over exploration and development rights in the East African region.
Somalia has made numerous efforts to end the civil war and unrest that has plagued the nation for two decades; culminating in an election of a new president in September of this year. President Hassan Sheikh Mohamud – a teacher, academic, and activist – won the election against out-going President Sheik Sharif Sheikh Ahmed, with MPs voting the new president in with 190 votes to 79. It is hoped that the newly elected President may bring some stability to the country, and should oil or gas be discovered in Somalia, the country may have a chance to start rebuilding its shattered economy.
