• Somalia Agrees to Offshore Oil Plans with Shell/Exxon

Analytical Instrumentation

Somalia Agrees to Offshore Oil Plans with Shell/Exxon

Mar 16 2020

Following talks with Shell and Exxon, Somali politician Abdirashid Mohamed Ahmed has confirmed the country is embarking on a joint venture to explore and develop offshore oil and gas reserves with the two energy giants. "I am delighted we have agreed an initial roadmap with the Shell/Exxon joint venture. This gives us confidence in (the)ability to further explore any offshore hydrocarbon potential," said Abdirashid Mohamed Ahmed in a statement.

The announcement builds on a petroleum legislation signed by Somali President Mohamed Abdullahi Farmajo earlier this year, which aims to support the development of a new frontier energy market in Africa and help Somalia transform its economy following decades of civil unrest.

Somalia sitting on up to 30 billion barrels

Recent seismic data suggests the Somali coastline could be cradling significant offshore oil reserves. Norwegian-based seismic data survey company TGS predicts reserves could be as high as 30 billion barrels spread across 15 shallow and deepwater blocks. While Somalia doesn't have the infrastructure to launch exploration and extraction projects, the joint venture with Shell and Exxon will empower the country with the scope to harness potential resources.

As part of the joint venture, Shell and Exxon have made a US1.7 million payment to Somalia to secure rent on five blocks that were awarded to the companies 30 years ago under the rule of former president Mohamed Siad Barre. While civil conflict prevented exploration, Abdirashid Mohamed Ahmed says progress is now underway.

“We have a long relationship with the Shell-ExxonMobil joint venture and look forward to this continuing as we seek to provide the building blocks we need to grow our economy,” he says. 

Shell and Exxon work towards "production sharing agreement"

“Shell EP Somalia and Mobil Exploration Somalia hold exclusive petroleum exploration and production rights over five offshore blocks in Somalia (M3/4/5/6/7) under a Concession Agreement with the Federal Government of Somalia which has been under force majeure since 1990," said a Shell spokesman in an article published by Petroleum Economist. “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, in line with the new Petroleum Law which is coming into effect. We continue to monitor the security and operating environment in and surrounding Somalia.”

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