Somalia offers seven offshore blocks in first ever licensing round


London — War-torn Somalia launched its first ever licensing round Tuesday, offering seven of its offshore oil blocks, as it seeks to rekindle its quest for oil.

Oil minister Abdirashid Mohamed Ahmed, speaking during his ministry’s webinar launching the round, said the country decided to go ahead with its plan despite the “challenging global circumstances,” as it had received “significant interest” on its acreage from oil companies in recent months.

Companies can place their bids from August 4 to March 12, 2021, according to Ahmed.

Somalia is one of the last frontier areas for exploration globally and this launch comes at a time when other countries are putting their upstream plans on hold due to the oil price rout and coronavirus pandemic.

Emerging from three decades of civil war, 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.

“[This] provides the optimum framework to create interest in the 2020 bid round,” Ahmed said. “Somalia could become one of the most significant plays offshore East Africa, with interest from oil and gas majors.”

The seven blocks on offer are Blocks 152, 153, 164, 165, 177, 178 and 204.

The ministry has was originally hoping to offer 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.

Exploration in Somalia began in the 1950s, with Shell, ExxonMobil, Eni and Chevron ending up with a handful of blocks. However, the start of civil war brought upstream activity — both offshore and onshore — to a standstill. In early March, the ministry agreed an initial road map with Shell and ExxonMobil, paving way for their return.

The companies, which had a joint venture in the country prior to 1991, when the civil war began after the toppling of dictator Mohamed Siad Barrre, are now looking to claim the legacy rights of their concessions as work was suspended because of conflict.



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