Page 4 - AfrOil Week 06 2020

AfrOil COMMENTARY AfrOil
Somalia is looking to promote exploration and development in the offshore zone (Image: Spectrum Geo)
Somalia enacts Petroleum Law
Mogadishu hopes new legislation will open up offshore oil and gas blocks, but it may not gain much momentum in the short term
WHAT:
President Abdullahi Farmajo has ratified a law that will govern the hydrocarbon sector.
WHY:
The law is designed to lay the foundation for investments that could transform the country’s economy.
WHAT NEXT:
Diplomatic and regional disputes are likely to hamper progress in the short term.
THE Federal Republic of Somalia has enacted a new body of law to govern the oil and gas indus- try. According to a statement from the country’s Ministry of Petroleum and Mineral Resources, President Abdullahi Farmajo ratified the Petro- leum Law on February 8, following its passage in both houses of Parliament.
In the statement, the ministry called the adoption of the legislation “a landmark moment in the development of Somalia’s natural resources.” It also said the law would be “trans- formational for the country’s development.”
Farmajo spoke similarly, saying: “The Petro- leum Law demonstrates the capacity of the Somalian people to unite in an historic effort to work together to build an equitable, pros- perous and peaceful nation. In supporting this law, our democratic institutions have renewed their commitment to work for all Somalis and advance the cause of continued reconstruction.”
Abdirashid Mohamed Ahmed, the Minister of Petroleum and Mineral Resources, stressed that the legislation would create an opening for international oil companies (IOCs) inter- ested in the country’s natural resources. “The
opportunities ... are enormous, with Soma- lia having the potential to become one of the most significant hydrocarbon plays in offshore East Africa,” he said. “The legislative process has [been] completed to open up this strategic opportunity. We now much look forward to moving to [signing] production-sharing agree- ments [PSAs] with our international partners.”
Provisions
The Petroleum Law defines Somalia’s onshore and offshore deposits of crude oil and natural gas as the exclusive property of the country’s cit- izens and seeks to maximise the benefits realised from such resources, the ministry declared. It also includes “a ground-breaking revenue-shar- ing agreement that ensures revenues will be dis- tributed among the Somali people through the federal states, and for the benefit of future gen- erations,” it said.
The legislation provides for the establish-
ment of a new government agency, the Soma-
lia Petroleum Authority (SPA), to serve as the “competent regulatory authority” overseeing the
oil and gas sector, it added. 
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w w w . N E W S B A S E . c o m Week 06 12•February•2020