Page 7 - AfrOil Week 43 2022

AfrOil INVESTMENT AfrOil

Federal Government of Somalia OKs

Coastline’s offshore exploration plans

SOMALIA US-BASED Coastline Exploration announced chairman, added: “We are delighted to have
on October 21 that it had secured a green light been given the go-ahead with the PSAs and we
from the Federal Government of Somalia (FGS) feel confident that we will discover major energy
for exploration work covering seven offshore reserves which will have a materially positive
deepwater blocks. impact on all Somalis. With the right partners
Coastline had signed production-sharing in place and a supportive government, Somalia’s
agreements (PSAs) for all seven blocks this Feb- nascent energy industry can look to the future
ruary with Abdirashid Mohamed Ahmed, then with confidence now that there is a clear road
serving as Somalia’s Minister of Petroleum and map to potentially securing a sustained domes-
Mineral Resources. However, the deals aroused tic oil and gas supply.”
some controversy. Just a few hours after the sign- President Mohamud and Minister Mohamed
ing of the PSAs, former President Mohamed also expressed satisfaction with the decision.
Abdullahi Mohamed publicly cancelled them, “This agreement highlights that Somalia is
saying in a statement posted on Twitter saying open for business and international investment
that the projects would not go forward, as they after the conflict that has blighted the country
had the potential to influence the upcoming for so many years. I would like to thank Coast-
presidential election. line for its commitment to Somalia, as it has
(The election was scheduled for late Febru- fulfilled its promise of investing here, unlike so
ary but took place in mid-May. It resulted in many other companies. Coastline clearly sees
President Mohamed’s replacement by Hassan significant opportunity in Somalia and we share
Sheikh Mohamud, who has appointed Abdi- its vision. The federal government will do all
rizak Mohamed as Minister of Petroleum and it can to support this project and we want the
Mineral Resources.) first exploration well to start as soon as possible.
According to Coastline, the controversy has Today marks a major step forward for Somalia
now been sorted out. In a press release dated as we look to develop our energy industry which
October 21, the company explained that it had should deliver material benefits for all Somalis.
“received final authorisation ... to proceed with Energy independence, new tax revenues and
its exploration programme.” Federal authorities further foreign investment in Somalia now
approved the PSAs “following [the] conclusion beckons,” the president said.
of an in-depth review conducted by the FGS into For his part, the minister added: “Hav-
the process followed by Coastline and by the ing seen how transformational new domestic
relevant Somali ministries and related advisory energy sources have been for other countries
groups,” it added. The company has deposited in Africa, we are very excited by the potential of
the $7mn signature bonus due to Somalia’s fed- these offshore oilfields. Today’s announcement
eral government under the terms of the PSAs in really kick-starts the energy industry in Soma-
the Somali Central Bank, it noted. lia and is a turning point for the development of
Coastline did not say when it expected to what is a critical revenue-generating area for the
begin work or reveal any details of its explora- country.” ™
tion programme. It did note, though, that it had
already invested $50mn in Somalia. Addition-
ally, it stated that it had high hopes for the off-
shore blocks and hoped eventually to extract up
to 100,000 barrels per day (bpd) of oil from each
of the fields it might discover within its acreage.
W. Richard Anderson, Coastline’s CEO,
commented: “Receiving the clearance authori-
sation means that we are now able to start our
exploration programme. Revenues from the
discovery of commercial quantities of oil will
be transformative for Somalia, from which the
government could finance investments in edu-
cation, infrastructure, healthcare and other vital
services, which will benefit all of the people of
Somalia, delivering continued economic growth
and improving the standard of living.”
Jacob Ulrich, the company’s non-executive Somalia’s offshore licensing round covered seven blocks (Image: TGS)

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