FuelFix
Monday, April 22, 2013
Somalia plans to sign 30 oil and gas production-sharing contracts
this year, starting with companies that operated in the country before
its government was toppled more than two decades ago, an official said.
“All prior holders have been contacted and three are ready to
continue,” including Royal Dutch Shell Plc (RDSA), Eni SpA (ENI), and
ConocoPhillips (C), Hussein Ali Ahmed, managing director of the
state-owned Somalia Petroleum Corp., said in an interview on April 18 in
the Kenyan capital, Nairobi. BP Plc (BP/) has indicated an interest in
returning, while Chevron Corp. hasn’t formerly answered the Somali
government’s call to come back, he said.
Somalia is one of the last frontiers for oil and gas in eastern
Africa as it recovers from a two-decade civil war that shattered the
economy and left the nation as one of the world’s least developed. In
the region, companies including Eni, BG Group Plc (BG/) and Statoil ASA
(STL) have discovered more than 100 trillion cubic feet of gas reserves
in Mozambique and Tanzania, while London-based Tullow Oil Plc (TLW) has
found oil in Uganda and Kenya.
Somali lawmakers in September elected Hassan Sheikh Mohamoud as the
country’s president, marking the 16th attempt to establish an effective
central government since 1991, when the former dictator Mohamed Siad
Barre was overthrown. The country’s security forces, backed by regional
peacekeepers, are still battling al-Qaeda-backed Islamic militants who
control parts of southern and central Somalia, after fleeing the
capital, Mogadishu, in August 2011.
Exploration Blocks
Somalia plans to increase the number of oil and gas exploration
blocks to 300 of 5,000 square kilometers (1,931 square miles) each,
after sub-dividing the existing 25 areas, according to Ahmed. Some
blocks are currently as big as 200,000 square kilometers, Ahmed said.
“We want to sub-divide because they are too big to award to single
companies for exploration in good time,” Ahmed said. Shell had five
blocks before Barre’s government fell, he said.
The area available to explore for oil and gas in Somalia is
equivalent to about one third of the country’s surface, Ahmed said. The
country expects to complete legislation under which oil and gas
activities will be managed within in months.
“We had drafted a law in 2008, but the new government asked to review
it, and we expect they will send in to parliament soon, and the whole
process should be complete in a few months,” Ahmed said.