Shell, Exxon Team up on Offshore Exploration in Somalia
The Ministry of Petroleum and Mineral Resources of the Federal Republic of Somalia has agreed on an initial roadmap with the Shell/Exxon joint venture focused on offshore exploration and development.
The roadmap will now convert years-old concessions into Production Sharing Agreements under the provisions of the Petroleum Law, which was ratified in early February.
Last June Shell and Exxon paid US$1.7 million to Mogadishu, Somalia, for its costs from historical surface rentals and other incurred obligations on the offshore blocks. That money was then distributed among Somalia’s Member States according to the revenue sharing agreement. The ministry said the distribution process was a model for how future funds from exploration and production would be handled.
“I am delighted we have agreed on an initial roadmap with the Shell/Exxon joint venture,” said Somali Minister of Petroleum and Mineral Resources Abdirashid Mohamed Ahmed in a statement.
“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 includes provisions that the country’s oil and gas will belong exclusively to the Somali people. It also embeds a revenue-sharing agreement which ensures revenues will be distributed among the Somali people through the Federal States, and for the benefit of future generations.
Commenting on the ratification of the Petroleum Law, the Minister added: “The opportunities for the international exploration and development majors are enormous, with Somalia having the potential to become one of the most significant hydrocarbon plays in offshore East Africa.
The legislative process has completed to open up this strategic opportunity. We now much look forward to moving to agreeing Production Sharing Agreements with our international partners.”
Source: Rigzone