Government Clarifies on Oil Production Sharing Agreement with Soma Oil and Gas

The ministry of petroleum has issued a statement denying any knowledge that there is a draft proposal about giving Soma Oil and Gas 90% of oil output in the future.

“Somalia is not accepting PSA deals at the moment. When the fiscal terms design is over, Somalia will invite companies to come forward with their PSAs. The article, of Ilya Gridneff of Bloomberg talks of a draft deal but Somalia did not receive any draft deal nor it is accepting proposals for PSAs now” Said the statement signed by Fatima Mohamed, the PSA of the minister.

The statement further read as follows

“Currently, the Ministry works diligently on preparatory matters, paving the way for sound exploration to occur: the regulatory and legal framework, including the amending of some provision in the Petroleum Law, introducing revenue sharing mechanism that distributes the wealth generated from oil and gas equitably between the Federal member States and the Federal Government, using an agreed formula. The downstream, tax, investment and the mining Code are all either being drafted and/or amended. All these laws need to be passed to the Council of Ministers and then to the Federal Parliament for ratification.

On the other front, the Ministry continues to work on the Production Sharing Agreement Model of Somalia, developed together with the Petroleum Law 2008. It is determined to design sound practices of fiscal management of the natural resources. The African Development Bank is supporting Somalia on coming up with its own fiscal terms that would protect Somalia’s economic interests without jeopardising the industry’ needs. In the next three months, the Production Sharing Agreement Model will be ready together with appropriately designed fiscal terms. Then is the time that Somalia goes into PSA negotiations.”.

There has been uproad in social media and other platforms about an article in the Bloomberg that talks about 90% production sharing modified agreement with Soma Oil and Gas company.

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