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Somalia prepares  for first bid round of oil fields

Somalia prepares for first bid round of oil fields

Somalia is preparing for a bid round covering seven blocks in its offshore with the official opening due on August 4. The closing date is March 12, 2021, Somali Minister of Petroleum & Mineral Resources Abdirashid Mohamed Ahmed said. The areas on offer are Blocks 152, 153, 164, 165, 177, 178 and 204, the minister said. Once blocks have been awarded, production-sharing agreements will be negotiated and signed. The offering is taking place in “challenging global circumstances with a negative impact on humanity and the global economy”, Ahmed said on a webinar organised by IHS Markit. The round is Somalia’s first ever licence round. Mogadishu sees revenues from the hydrocarbon sector as a catalyst for the economy to become dynamic and self sustaining, the official said. Somalia’s Petroleum Law was officially ratified in February this year. This legislation set out how revenues from hydrocarbons would be distributed, between the federal government, the states and local communities. Ahmed cited the successful test of the revenue sharing agreement seen following payments from Shell and ExxonMobil for historic licences in the East African country. The law “provides the optimum framework to create interest in the 2020 bid round. The opportunity is huge … Somalia could become one of the most significant plays offshore East Africa, with interest from oil and gas majors,” the minister said. In addition to the revenue distribution, he also gave assurances that the bid round process would be carried out in a manner that was “transparent and fair for everyone”. TGS is handling the seismic data for the round. The company’s David Went noted there were two 2D seismic surveys on the area under offer, one from 2014 and the other from 2015-16. One well has been drilled off Somalia, the Meregh-1 in shallow water. The country offers a “highly prospective frontier basin with multiple plays”, he said. Somalia is required to launch a regulator, the Somali Petroleum Authority (SPA), within six months of the Petroleum Law’s ratification. The country has also published a model PSA. “Somalia is open for business big time,” Ahmed said by way of conclusion.