Member states to get 45% in offshore revenue-FGS/FMS pact

The Federal Government will get 55% of oil revenue from offshore drilling while the Federal Member States will have 45% to be shared between the oil producing and non-oil producing states, an agreement by the two levels of government presented to parliament reads.

The agreement submitted to the Lower House last week notes that the states where offshore drilling is done shall get 25% of the revenue while the specific district hosting the oil wells gets 10%. A further 10% will be shared among states where the oil is not produced.

In the event of onshore drilling (drilling under the earth’s surface as opposed to underneath the seabed in offshore drilling), the Federal Government shall be allocated 30% of the revenue while the producing FMS and the hosting districts earn 30% and 20% respectively. The non-producing states shall be entitled to 20% of the revenue.

Debate on Petroleum Bill commences as FMS leaders demand review

Other revenue streams include signing which shall be divided in 40-60% basis with the FMS getting the bigger share. Royalty (which refers to the portion of production the landowner receives) will be shared on 40-40% between the FGS and FMS (oil producing) while the hosting district and the non-oil producing FMS will each be allocated 10%. The local community within the oil-producing state will get 30% development support while the hosting district will go with the lion share (70%).

Revenue from license fees shall be shared on a 50-50 basis between the Federal Government and the Federal Member States.

SPA

Somali Petroleum Authority (SPA) will be responsible for licensing, monitoring and enforcement of the petroleum rules and regulations. The Petroleum Bill which went through second reading last week also envisages the formation of Somali National Oil Company (SONOC) which shall be a joint venture between the Federal and State governments.

The agreement dated June 5, 2018 and signed by all the Federal Member State leaders and Banaadir Governor and Prime Minister Hassan Khaire on behalf of the Federal Government came out of the Baidoa meeting last year.

It is not however clear which aspects of the Bill in the just concluded Garowe talks were to be addressed since there seems to have been an agreement already especially on revenue sharing.

Jubbaland and Puntland dismissed the Bill last week noting they had not been consulted.