Somalia expects to announce winners of first petroleum auction early 2021

CAPE TOWN, 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 on Wednesday.

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 oil and gas auction officially opened on Tuesday.

“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).

The government had previously mooted offering 15 blocks in this licensing round but cut this down to seven due to capacity constraints, Hussein, a former advisor to Somalia’s energy minister, said. Seismic data previously indicated the 15 blocks could contain around 30 billion barrels of oil.

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.