Somalia PM Hamza Abdi Barre rejects oil deal with American firm

MOGADISHU, Somalia - A recently signed oil deal between the federal government of Somalia and an American firm is null and void, Prime Minister Hamsa Abdi Barre has stated while calling for immediate revocation of the deal which could have potentially resuscitated the country's economic fortunes.

Somalia's Minister for Petroleum and Mineral Resources Abdirizak Omar Mohamed, signed the deal with the U.S.-based Liberty Petroleum Corporation, targeting three Production Sharing Agreements (PSAs) in the country's oil-rich coastline.

But Barre, who is the defacto head of government, called for revocation while directing that a strict review by the Inter-Ministerial Contract Committee (IMCC) be carried out to ensure adherence to the 2016 National Petroleum and Contracts Law.

The PM asserts that any agreement not undergoing this legal process is null and void, signaling a rigorous stance on transparency and legal compliance in governmental contracts. The agreement focused on three offshore Blocks 131, 190, and 206.

Experts believe Somalia possesses over 30 billion barrels of oil and gas reserves, which if full exploration is done, would significantly transform the country's dwindling economic fortunes. The agreement had put the country into the global spotlight on oil production.

Had the deal gone through full implementation, it would have given Liberty Petroleum Corporation a five-year duration in handling Somalia's offshore oil. The three blocks are said to be rich in oil and would exponentially raise the country's global status as an oil-production nation.

"After more than ten years of positive and fruitful dialogue with the Government of Somalia, we are honoured to be signing these three exploration contracts. It truly is a collective achievement that is historic," said Lane Franks, the company's Chief Executive.

"We are aware of the responsibility that now lies on our shoulders to explore and hopefully develop the petroleum resources within these blocks in a manner that delivers maximum benefit to the people of Somalia".

Long spells of instability have curtailed Somalia's oil exploration journey, with major multinationals leaving the country following the civil war. Shell and ExxonMobil were major investors in Somalia’s coastline before the civil and later, Al-Shabaab setbacks.

Two years ago, the country also entered a deal with Coastline Exploration Company. The $7 million exploration agreement with Coastline, which is run by one of Soma Oil & Gas's original financial backers, Russian-Georgian billionaire Dzhaparidze, will cover seven areas that will be fully operationalized by 2025.

Coastline Exploration was established in 2018 and is the contractual owner of Soma Oil & Gas, a company that has gathered seismic data off Somalia's coast. Soma Oil & Gas was previously investigated by the UK's Serious Fraud Office, but would later be vindicated after a 17-month Court duel.

The latest pronouncement effectively means that the government ought to redo the deal by revising fundamentals, which Abdirizak Omar Mohamed will have to table before the cabinet before proceeding with the move. President Hassan Sheikh Mohamud had previously expressed a desire to explore more oil for the benefit of the country.

GAROWE ONLINE