Somalia: FGS offers offshore oil blocks in first ever licensing amid dispute with Federal States

MOGADISHU, Somalia - Somalia has launched its first-ever licensing round for seven offshore oil blocks, officials announced on Tuesday, in a rather dramatic which could renew controversy with member states.

The licensing round comes just three months after President Mohamed Abdullahi Farmajo inked the controversial petroleum law, which was boycotted by regional legislators especially from Puntland and Jubaland, who contested some clauses on revenue share.

Abdirashid Mohamed Ahmed, the war-torn nation's oil and natural resources minister, said the authorities decided to carry on with the plan despite "challenging global circumstances," as it had received "significant interest" on its acreage from oil companies in recent months.

He was speaking during the webinar launching round on Tuesday. Interested companies, he noted can place their bids from August 4 to March 12, 2021, after which the ministry shall review them for further actions.

In a tweet, Senator Ilyas Ali Hassan, who is also a member of the Natural Resources Committee in the Upper House, faulted the country for prioritizing auctioning of oil fields instead of the current Coronavirus pandemic.

The opposition senator insisted that the move was a manifestation of "poor planning and prioritization" by the federal government. So far, the country has recorded over 1,100 COVID-19 cases, the second-highest within the Horn of Africa after Djibouti.

Somalia is one of the last frontier areas for exploration globally and this launch comes at a time when other countries are putting their upstream plans on hold due to the oil price rout and coronavirus pandemic.

For almost a decade now, Somalia's government, which was established in 2012, has earmarked the oil and gas industry as one of the ventures which can give the country a solid source of income. The venture, Ahmed had said, will also help expand job opportunities for the young people.

"[This] provides the optimum framework to create interest in the 2020 bid round," Ahmed said. "Somalia could become one of the most significant plays offshore East Africa, with interest from oil and gas majors."

The seven blocks on offer are 152, 153, 164, 165, 177, 178, and 204, he noted. This also comes barely six months after an initial agreement was signed by Shell and ExxonMobil, who paid close to $1.7 million in a lease that will last for three decades.

During a summit in South Africa in November, Ahmed also hinted that the blocks in question "have nothing to do with our maritime disputed territory with our neighbors" in reference to tussles with Kenya over the Indian Ocean maritime border.

The two nations are currently at the International Court of Justice where the case is scheduled to be heard in June. Last year, Nairobi successfully lobbied to have the matter solved diplomatically but Farmajo, in a rejoinder, said: "We have total faith in the court".

Originally, reports indicate, the Horn of Africa nation had intended to offer 15 offshore oil blocks for exploration. But sources said the number was reduced as a number of oil companies are starting to cut back their upstream projects due to the recent price collapse.

The 15 blocks were estimated to give around 30 billion barrels according to geophysical firm TGS, which is conducting seismic data tests of these licenses, reports indicate.

For the better part of infantry stages of its independence, Somalia was among the top oil-producing nations in Africa but the fortunes dramatically diminished following the civil war which engulfed sunset years of former President Siad Barre's regime.

Shell, ExxonMobil, Eni, and Chevron were some of the top companies that explored the resources. Even after the civil war, the country is still struggling with inter-clan conflicts and Al-Shabaab menace, which seems to be a soiling peacekeeping mission.

But despite these developments, President Mohamed Abdullahi Farmajo has lots of unsolved controversies, including the pressure from member states over the sharing of resources. The formula of sharing proceeds, some of the states argued, is "opaque and unacceptable".

In March this year, Said Abdullahi Deni, the regional President of Puntland, urged the federal government to "embrace dialogue" for the sake of solving some of the controversial clauses in the petroleum law, which was also subjected to criticism from Jubaland official.

However, his proposals which were backed by international partners may have after all been slowed down by the Coronavirus pandemic. To date, Somalia has registered over 1100 positive cases and 53 national deaths.

GAROWE ONLINE