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Somalia oil blocks put up for initial bidding

Saturday May 16 2020
oil_exploration

Somalia has officially opened the first round of bidding for oil exploration. PHOTO | FILE | NATION MEDIA GROUP

By AGGREY MUTAMBO

Somalia has officially opened the first round of bidding for oil exploration, even as critics charged there was insufficient law to manage the programme.

The country's Ministry of Petroleum and Mineral Resources said the programme, known as the Licensing Round Pre-Announcement Offshore will target seven blocks with the 'most potential' for hydrocarbons.

The blocks are scattered in Galmudug state, Hirshabelle, South West and Jubbaland.

Officials argued the bidding will be run under the Somali Petroleum Law as well as Petroleum sharing agreements.

“The process will be transparent and take for one year, said Mohamed Abdikadir Hilaal, Somalia's Deputy Minister for Petroleum and Mineral Resources.

This week, the Ministry gathered some 130 international investors for a virtual meeting where they were told of the potential for the oil stock. Somalia has about 50 offshore oil blocks running along its 3,000 km coastline.

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“The pre-announced Licensing Round is the beginning of a tendering process. Somalia will only officially sign an exploration agreement when the Extractive Income Tax Law is enacted,” the deputy minister said.

Opening bids this week, however, saw some critics question its timing.

Mr Ilyas Ali Hassan, the Chairman of the Natural Resources Committee of the Somali Senate argued Somalia may be short-changed at a time of low global oil prices, changing focus away from fossil fuels and during a political season in Somalia. He said Somalia was in fact facing more urgent matters inside its territory.

“The oil price is in the lowest ever and the world is fighting for the Coronavirus Pandemic plus Somalia is fighting floods from Qardho, Beledweyne to Bardhere,” he told The EastAfrican.

“So they need to know what the priorities for the country are and the rest of the world. Also, Somalia is approaching the election time and it is a little suspicious to sell the oil blocks.”

Mr Mohamed Omar, an analyst on Somali politics, countered that no country had had a straight path in utilising its natural resources, especially those prone to global price fluctuations.

“Somalia must start auctioning those blocks. The world is moving away from oil dependence onto renewable energy and Somalia shouldn’t be left behind....This process has been lagging behind the rest of the world and the chance is now or never,” he said.

Those bids, however, were announced before a relevant revenue sharing agreement between the federal government and federal States was reached.

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