Oil Concession Agreement Raises Questions in Somalia

In this week bloomberg.com reported a new draft production sharing agreement between Soma oil & Gas holdings Ltd, and Somali Federal Government. Under the agreement 90% of the revenue from the oil goes to Soma Oil holdings and Somali government will receive a 10% of the entire revenue.

Open Oil, the world’s largest public online database of oil contracts, compared the terms of the Soma PSA to nine “early-stage” offshore African contracts and found it as unprecedented on its kind. So why this terrible deal for the Somali people? A question asked by Brnaby Pace who is a researcher for Global Witness.

In a hastily prepared press Statement responding to the news report, the petroleum Minister Mohamed Mukhtar said “We are not about to rush into any deals that may compromise the federal government’s ability to use any income generated to its own advantage”.

East African Energy Forum (EAEF), a group of Somali resource experts and lawyers condemns the move “This deal goes against the very principle of transparency and anti-corruption that this government took an oath, we are surprised at the cloud of secrecy and “behind closed-doors” Methodology, this government believes they can deal our natural resources in”.

What makes things more puzzling is that the company __ Soma Oil and Gas which got such lucrative oil deal___ is just two years old and has no record whatsoever of previous oil venture and offshore seismic survey anywhere in the world.

This goes directly contrary to Somalia’s rich chronology of oil and gas exploration agreements with international oil companies. This includes Chevron, Conoco Philips, Shell, and Eni, and they all have rights over much of Somalia’s oil exploration fields since the period of the agreement was disrupted by the civil war.

Experts are concern that the survey territory for Soma Oil and Gas may be overlapping that of other international oil giants.

To make things shoddier, Somalia parliament has yet to pass the petroleum law, and neither rectified the agreement with Soma Oil and Gas.

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