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Somalia favours firms with pre-1991 deals for oil exploration

Wednesday, October 03, 2012
By Sarah Young

LONDON Oct 2 (Reuters) - Somalia, hoping to share in East Africa's oil and gas boom, has invited back international oil companies that held exploration licences before civil war broke out two decades ago, an adviser to the government said.

Abdullahi Haider, a senior adviser to Somalia's Ministry of Energy, said the country would honour contracts signed prior to 1991 with oil majors including Royal Dutch Shell, BP and Chevron.

"They will be given priority," Haider said of the companies that had signed exploration deals before the conflict.

Somalia will offer onshore and offshore exploration blocks to companies in a licencing round early next year, Haider added, a process that would enable new companies to come to the country as well as those with permits from the 1980s.

"I've seen so many people who are very much interested like Shell, like Chevron. I've met them here and they expressed very high interest," he said in an interview on the sidelines of a conference in London on Tuesday.

The government had sent a letter to the companies inviting them to come and negotiate on new contract terms, he added.

Somalia inaugurated a new president in mid-September in the first such ceremony for over 20 years, prompting hopes that it had turned a corner after a regionally-brokered, United Nations-backed effort to end fighting in which tens of thousands of people were killed.

The country hopes exploration by major oil companies will enable it to participate in the excitement over a string of discoveries in East Africa that have aroused expectations the region will become an important energy supplier.

Should companies choose to return, they will negotiate with the government over converting the old royalty-based contracts into production sharing agreements.

Any companies that signed oil exploration deals after 1991 could negotiate but would not be given priority, he said.

Somalia also hopes to resolve a maritime border dispute with its southern neighbour, Kenya.

The disagreement between the two has threatened to upend some exploration rights that Kenya has granted to oil and gas companies including France's Total and Texas-based Anadarko.

"This dispute can be regulated in a friendly way," Haider said.


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