Somalia Demands Western Oil Companies Begin Oil Exploration or Forfeit Rights

GOOBJOOG NEWS|MOGADISHU: The Government of Somalia has issued a firm altimatum to Western oil companies holding license: begin exploration work or relinquish your contracts.

The warning reflects growing frustration of the government over delays in petroleum development, years after production-sharing agreements were signed with these companies.

Following President Hassan Sheikh Mohamud’s re-election in May 2022, the Government awarded seven production-sharing agreements to Coastline Exploration Limited- now restructured into Aquila Coastline Ventures and Soma Oil and Gas – and three production sharing agreements to Petroquest Africa 1 and 2, subsidiaries of Liberty Petroleum Corporation.

The Government expected these companies to fulfill their minimum work program obligations, which include conducting three-dimensional seismic surveys, drilling exploratory wells, and meeting associated financial commitments. However, instead of initiating on-the-ground operations, the companies focused largely on seeking partnerships through farm-out agreements and participating in international oil and gas conferences.

This pattern is not unusual in frontier oil markets where companies often hedge risk by bringing in partners before committing capital. But from a government’s perspective, prolonged inactivity translates into lost time, lost revenue, and growing political pressure.The Government of Somalia now seems to have run out patience.

The shift comes after Mogadishu signed an intergovernmental petroleum agreement with Türkiye in 2024, and granting three production-sharing agreements to the Turkish Petroleum Corporation. The company has since moved quickly, completing three-dimensional seismic surveys in 2025, with exploratory drilling expected to begin in 2026. This rapid progress has intensified scrutiny over the performance of Western companies holding production sharing agreements.

As a result, the Somali government has taken a firmer position toward underperforming western oil companies.The Minister of Petroleum Dahir Shire Mohamed said in a recent interview that Liberty Petroleum Corporation has relinquished two of its three production-sharing agreements following the government’s “explore or relinquish” policy.

He added that the other Western company is expected to conduct a three-dimensional seismic survey, though he did not specify which block will be covered.

The minister also did not clarify the status of the remaining six licensed blocks held by Aquila Coastline venture and Soma Oil and Gas. As Somalia approaches the critical phase of oil drilling, the stakes for governance and public accountability are rising.

A recent study underscores the importance of good governance in ensuring that petroleum resources deliver broad national benefits, and warns that without strong transparency measures – such as publishing contracts, disclosing operational activities and clearly accounting for revenues – Somalia risks repeating the mistakes seen in other resource-rich countries, where oil wealth has often been undermined by corruption and mismanagement.