Somalia Invites Companies with Oil Exploration Licenses

With hopes to share in oil and natural gas boom throughout East Africa, Somalia has invited back oil companies abroad holding oil exploration licenses prior to its civil war twenty years ago, according to a government adviser.

Abdullahi Haider of Somalia’s Ministry of Energy said that the country will honor contracts signed before 1991 with oil companies like Royal Dutch Shell, Chevron and BP.

Haider said that firms which signed oil exploration agreements prior to the conflict will get first dibs on these oil investment opportunities.

Somalia will offer offshore and onshore oil-bearing tracts of land to E&P companies during a bidding round in the early parts of the coming year, added Haider. The process will allow new firms as well as those holding leases from the 80s to participate in the bidding.

In a recent interview during a conference held in London, Haider said that he has seen a lot interest from firms like Chevron and Shell whose representatives were also in attendance. Haider also said that the government has given out letters to firms inviting them to visit the country and discuss new contract terms.

Back in the middle of September, Somalia swore in a new president for the first time in more than 20 years, signaling hopes that it has begun a new era following a regionally-brokered, UN-supported effort to stop the fighting that killed so many people.

The nation hopes that oil exploration by exploration and production companies will let it join the continent’s excitement over a set of findings in East Africa that have sparked expectations that the region will be a significant supplier of energy.

If companies decide to come back, they and the Somali oil ministry will determine exactly how to transform the old contracts, that are royalty-based into more modern, output-sharing agreements.

Companies that acquired oil exploration agreements after 1991 may negotiate but will not be prioritized, said Haider.

Moreover, Somalia is hoping to solve an offshore border conflict with Kenya. The misunderstanding between the two countries has threatened to invalidate several oil exploration agreements granted by Kenya to E&P firms, including Total of France and Anadarko of Texas. It is widely believed that this dispute will be resolved amicably and soon.