At a 90-minute session of Africa Oil Week Virtual Somali Petroleum Authority’s Chief Executive Officer, Ibrahim Ali Hussein, says the country is open for business.
According to him, Somalia has become a more attractive prospect since the signing of the country’s Petroleum Law and Revenue Sharing Agreement earlier this year, followed by the official licensing round announcement on August 4.
With seven blocks on offer, the round, set to conclude in March 2021, presents operators with the opportunity to enter one of the last frontier passive margins in the world.
At AOW Virtual, Hussein outlined the role of the newly-formed SPA, explaining how the independent body will work inclusively with states and the federal government to “apply the principles of openness, accountability, transparency and non-discrimination in procedures and systems.”
The SPA has since appointed six directors, each from a different state (Banadir Regional Authority, Hirshabelle State, Galmudug State, South West State, Jubaland State and Somaliland State). This is in line with the revenue sharing agreement, which divides any funds between the various parts of the country.
Hussein was joined by Dr. Alessio Checconi, Senior Business Development Manager for Africa and the Middle East at TGS, who were a partner organisation for the session and are currently working closely with the SPA and Somali Ministry of Petroleum and Mineral Resources.
Checconi gave a below-ground overview of the seven blocks on offer, saying, “If I were to pick just one block, I would look at the central and Southern blocks.”
Scot Fraser of Ventura International Energy, who joined the session to provide insight into fiscal benchmarking based on his proprietary research, added, “The more wells the better. The companies that are bidding need to be active in order for the industry to be sustainable.
“One well in a block will probably condemn the potential of the basin…. There are a variety of different plays and the blocks are large, so any campaign that allows you to mitigate some of those risks and separate the dependencies is clearly going to be to the advantage of announcing that first commercial opportunity.”
A primary concern when considering investment in a region like Somalia is security. Phil McDonald, former Royal Marine Commando and current Regional Director for Africa at Castor Vali was on hand to offer a frank analysis of above-ground risk in the region.
According to McDonald, though onshore risks from Al-Shabab and Islamic State remain significant, offshore pirate attacks have decreased exponentially, from a high of 160 reported attacks in 2011, to just one this year.
McDonald stated, “I have no evidence or reason to see a return to prominence (of piracy) or a spike as it was five years ago. However, the risk is still there and that illustrates the need for robust security mitigation measures.”
