Shell, Exxon on road to Somalia re-entry

A Shell logo sits on a sign at a gas station, operated by Royal Dutch Shell Plc., in Rotterdam, Netherlands, on Wednesday, July 25, 2018. Shell is scheduled to release earnings figures on July 26. Photographer: Jasper Juinen/Bloomberg

By Ed Reed

Somalia has reached an “initial roadmap” with a Shell and ExxonMobil joint venture on offshore exploration.

The Somali Ministry of Petroleum and Mineral Resources said the roadmap was focused on converting concessions struck many years ago into new production-sharing agreements (PSAs), in line with the recently ratified Petroleum Law. Shell and ExxonMobil paid $1.7 million to Mogadishu in June 2019, covering their outstanding bills linked to their historic concessions on the offshore areas.

The cash was distributed among Somalia’s states in line with the revenue-sharing agreement. The ministry said this dispersal demonstrated how future cash from hydrocarbons would be shared out. Somali Minister of Petroleum and Mineral Resources Abdirashid Mohamed Ahmed welcomed the signing of the roadmap agreement. “This gives us confidence in our ability to explore any offshore hydrocarbon potential further. We have a long relationship with the Shell/Exxon joint venture and look forward to this continuing as we seek to provide the building blocks we need to grow our economy.”

The Petroleum Law was ratified on February 8, allowing Somalia to declare its new licence round open. The country had held a roadshow in London in February 2019 to flag its potential. This also triggered a renewed spat with Kenya, which is pursuing maritime claims against Somalia. In addition to the dispute with Kenya, Somalia’s federal government has a continuing struggle to keep its member states on board. Puntland, for instance, rejected the Petroleum Law signing.

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Source: Energy Voice