Somalia expects to announce winners of first oil Blocks early 2021

Somalia expects to announce the winners of its first oil and gas licensing round early next year, as the country seeks petro dollars to help rebuild its struggling economy, a senior government oil official said via Reuters.

Battered by violence and an Islamist insurgency since clan warlords overthrew a dictator in 1991, Somalia is offering seven deep water offshore blocks in its maiden licensing round in one of the world’s last frontier markets. The seven blocks on offer are Blocks 152, 153, 164, 165, 177, 178 and 204.

The original offer were 15 offshore oil blocks in this licensing round. But sources said the number was reduced as a number of oil companies are starting to cut back their upstream projects due to the recent price collapse.

These original 15 blocks had a resource potential of 30 billion barrels, according to estimates by geophysical firm TGS, which is conducting seismic data tests of these licenses

Somalia’s internationally recognized federal government, which has been in place since 2012, has renewed efforts to attract oil investment. It officially launched a new petroleum law in February, a few months after it established a revenue sharing agreement with its member states.

 “We are expecting that in the first quarter of next year to finalise and award the block contracts,” Ibrahim Ali Hussein

told Reuters in his first interview with international media since his appointment last week as the CEO of the Somali Petroleum Authority (SPA).

He said the coronavirus pandemic had delayed talks between the government and a joint venture of legacy rights holders Shell and Exxon Mobil to convert their existing concession into a production sharing agreement (PSA).

“If there was not coronavirus, the roadmap that we agreed … was to get the contract back before the end of this year, December,” he said.

Converting the concession into a PSA would also help end a force majeure by the oil majors that has been in place since 1990, Hussein said. Shell and Exxon hold exclusive petroleum exploration and production rights over five shallow water offshore blocks.

 “We have an ongoing and constructive dialogue with the Somali authorities about a roadmap potentially to convert the existing concession to a production sharing agreement,” a Shell spokesman said.

Exploration in Somalia began in the 1950s, with Shell, ExxonMobil, Eni and Chevron ending up with a handful of blocks owing to emergence of civil war outbreak in 1991.

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