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Somalia will announce deadline for maiden licensing round 'soon' after encouraging bids


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Seven blocks open for licensing

  • Author
  • Claudia Carpenter
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  • Apoorva Gupta
  • Commodity
  • Energy Oil Metals

Somalia will announce the deadline to bid for its first crude oil offshore licensing round "soon" after receiving interest from international companies to start exploration drilling in the country, the director general of the country's Ministry of Petroleum & Mineral Resources told S&P Global Platts.

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"We are encouraged at the interest so far," Mohamed Arabey Hashi Abdi said Nov. 10 on the sidelines of the Africa Oil Week in Dubai. He said interest has also been expressed in Dubai in the past few days. Oil production could start for the first time in the country in two years, he said.

The Somalia Petroleum Authority launched the country's first-ever offshore round in May 2020 offering seven blocks in the offshore which runs into the Indian Ocean and Gulf of Aden. At the time, the round was due to close for bids on March 12, 2021, but was extended. The deadline is likely to be next year, Abdi said.

Negotiations with interested companies are currently underway to decide terms for the production sharing agreement, he said.

The seven blocks in the licensing round are estimated to hold more than 30 billion barrels of oil, Abdi said. Somalia discovered oil in 1950 but the civil war caused companies including Exxon Mobil to halt operations. Since 2009, a new government has brought stability to the country, Abdi said.

Somalia has more than 200 blocks offshore that could potentially hold crude oil, he said. Somalia is also looking into ways to attract investors in downstream operations including refineries as the country currently imports all of its gasoline from the Middle East, mostly from the UAE and Oman, Abdi said. Somalia established a petroleum law in 2020 that is the framework allowing for exploration and hydrocarbons production in the country onshore and offshore.