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Somalia set to announce winners of first petroleum auction in 2021

Somalia is seeking oil cash to help rebuild a struggling economy that has been damaged further by the effects of the coronavirus disease

Somalia expects to announce the winners of its first oil and gas licensing round early next year, says Ibrahim Ali Hussein, chief executive officer of the Somali Petroleum Authority (SPA).

Somalia is offering seven deepwater offshore blocks in its maiden licensing round in one of the world’s last frontier markets. The oil and gas auction officially opened on last Tuesday.

“We are expecting that in the first quarter of next year to finalise and award the block contracts,” Ibrahim Ali Hussein told Reuters.

Choosing to share?

Ali Hussein said the government had previously mooted offering 15 blocks in the first licensing round but cut this down to seven, due to capacity constraints.

Seismic data previously suggested the 15 blocks could contain roughly 30 billion barrels of oil.

He said the coronavirus pandemic had delayed talks between the government and a joint venture of the legacy rights holders, Shell and ExxonMobil, to convert their existing concession into a production sharing agreement (PSA).

“If there was not coronavirus, the roadmap that we agreed … was to get the contract back before the end of this year, December,” he said.

Converting the concession into a PSA would also help end a force majeure by the oil majors that has been in place since 1990, Hussein said.

Shell and Exxon hold exclusive petroleum exploration and production rights over five shallow-water offshore blocks in the country.

“We have an ongoing and constructive dialogue with the Somali authorities about a roadmap potentially to convert the existing concession to a production sharing agreement,” a Shell spokesman said.

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