Somalia’s first oil and gas licensing round announcement

Somalia announced its first oil & gas licensing round on 1 November 2016 at the 23rd Africa Oil Week Conference in Cape Town. The round provides an opportunity for exploration companies to bid for offshore blocks surrounding the Galmudug, Hirshabelle and South West State regions.

The announcement by Somalia’s Minister of Petroleum & Mineral Resources included details of the recently finalised production sharing agreement that bidders will be required to conclude with the Ministry and the fiscal terms that will apply. The Minister also gave an overview of the status of the new Somali Petroleum Law which has been drafted and is now being reviewed by key stakeholders.

This announcement has been eagerly awaited by the industry given Somalia's location in East Africa and the recent and ongoing exploration successes in neighbouring countries such as Kenya.

The session led by Somalia’s Ministry came on the same day as CMS and Fugro NV, a leading Dutch survey company, gave a presentation to the conference on their innovative approach to establishing a system for technical and legal appraisal of disputed maritime boundaries between two coastal states. A key area of discussion as part of this presentation was the ongoing International Court of Justice action brought by Somalia against Kenya in relation to the disputed area of their maritime boundary.

The outcome of the boundary dispute, which may not be known for another three or four years, especially with the recent challenges by Kenya to the ICJ’s jurisdiction to hear the dispute that the Court will first need to rule upon, is likely to be a key consideration for potential bidders in this round.