Today from Hiiraan Online:
Ads By Google
Somalia May Pay 90% of Oil Revenue to Explorer Under Draft Deal
Soma Oil & Gas, a London-based company looking for oil in Somalia, has proposed a deal with the Somali government that may grant it as much as 90 percent of the country’s prospective oil revenue.
By Ilya Gridneff
Friday, May 29, 2015
Ads By Google
NAIROBI -- Soma Oil & Gas Holdings Ltd., chaired by former U.K. Conservative Party leader Michael Howard, has proposed a deal with the Somali government that may grant it as much as 90% of the country’s prospective oil revenue.
A draft production-sharing agreement, obtained by Bloomberg from an official close to the negotiations, sets the state’s share of revenue on the first 25,000 bopd at 10% if found at a depth of greater than 1,000 m and when oil costs less than $70 a barrel. If output exceeds 150,000 bbl, Somalia’s take rises to 30%. Crude for delivery in June fell 0.4 percent to $57.30/bbl at 4:45 p.m. in London on Thursday.
Any deal with Somalia will include terms that are “fair and balanced” and reflect those signed in other high-risk, offshore oil and gas jurisdictions, Chief Executive Officer Robert Sheppard said in an e-mailed response to questions on May 27. “The proposals being discussed are in line with current industry standards.”
Somalia is trying to attract investors to help rebuild its economy after African Union-backed government forces regained control of parts of its central and southern region seized by al-Shabaab in an insurgency that began in 2006. The Horn of Africa nation is scheduled to hold a general election in 2016, the first since 1967, according to the Heritage Institute, a Mogadishu-based research organization.
Oil and gas output may start by 2020 after exploration work showed the potential for “huge” offshore deposits, former Petroleum Minister Da’ud Mohamed Omar said in February.
The government is drafting a production-sharing-agreement model before signing any deals, the Petroleum Ministry said April 20. “Nothing has been signed and there are no developments,” Fatima Mohamed, personal assistant to Petroleum Minister Mohamed Moktar Ibrahim, said by phone on May 25 after being asked to comment on the Soma proposal.
The draft agreement calls for the London-based company to be granted a four-year royalty holiday for oil and gas found less than 1,000 m below the sea surface. Deeper finds should carry a six-year moratorium, the document shows. Soma also requested a moratorium on taxes for at least 10 years.
Johnny West, founder of Berlin-based OpenOil, the world’s largest public online database of oil contracts, compared the terms of the Soma PSA to nine “early-stage” offshore African contracts, including post-war Liberia, that have potentially high costs, high exploration risk and various degrees of political risk.
“None of them defer significant revenue streams to the government for as long as Soma,” he said. “The next lowest cap on upside to the government of a mega-find is effectively 60% of profit, half as much again as in the Soma deal,” he said in a phone interview.
Soma proposes that if oil prices are at $70 to $150/bbl, the company receives 70% of revenue for the first 25,000 bbl and 50% on production in excess of 150,000 bopd. The company also offers the government 50% for the first 25,000 barrels and 30% for production above 150,000 bbl if oil rises above $150/bbl -- which would be a record high.
“Normally, fiscal and commercial terms for petroleum exploration, development and production are carefully crafted by the host government to balance the perceived petroleum prospectivity of a region,” said Michael McWalter, an international oil and gas specialist and former adviser to the Ghanaian government. “If oil and gas are abundant, the government takes a greater percentage of the net value of the petroleum after costs have been recovered, and conversely if not so abundant, the government takes less.”
Soma has spent $40 million on seismic surveys of 60,000 sq km off the Somali coast, according to the company’s website. In November, Sheppard said the company would give the government its processed seismic data by “late this year, early next year.”
The data will be transferred to the Petroleum Ministry by the end of the second quarter, Sheppard said this week.
Canada to Strip Citizenship of Dual-National Terror Convicts
Kenya to host regional conference on extremism
Norway: Two-thirds negative to child marrying a Muslim
- The Local
Sepp Blatter Re-elected as FIFA President
- NY Times
Kenyan man pleads guilty in US to supporting terrorist groups
- Capital News
Despite crisis, Sepp Blatter wins re-election as FIFA president
85 'radicalized' Kenyan youth surrender
Djibouti to source 100% of its energy from renewables by 2020
Danes talk tough on immigration ahead of election
Senators want Obama to address Kenyan Parliament
- Daily Nation
Obama dad's grave to get Sh1m facelift
- The Star
President cancels Nigeria trip after delegation scandal
- Daily Nation
Shift to training regional forces as Somali piracy decreases
From Eritrean child soldier to Swedish parliamentarian
Aussie Citizenship Law Draws Muslim Ire
How The World's Largest Refugee Camp Remade A Generation Of Somalis
Nearly 60% of Americans back drone strikes overseas
Doctors Without Borders Pulls Staff From Dadaab Refugee Camp, Citing Al Shabab Concerns
Sponsors threaten to blow whistle on $1.6bn deals
Ads By Google
All Rights Reserved Copyright. © 1999-2018, www.hiiraan.com