Somalia has agreed PSAs (production sharing agreements) with U.S.-based Coastline Exploration following recent government and presidential approvals.
Coastline Exploration is a Houston-based upstream oil and gas company focused on East Africa including deep-water offshore Somalia.
Coastline agreed to pay a $7 million signature bonus to the Somali Central Bank for its seven PSAs following high -level government meetings in Mogadishu with the Somali President, Deputy Prime Minister, Minister of Energy & Minerals, Chairman of the Somali Petroleum Authority and the Attorney General of Somalia.
Coastline will now move forward with its exploration program.
Somali president Hassan Sheikh Mohamud said the agreement “highlights that Somalia is open for business and international investment after the conflict that has blighted the country for so many years.
“I would like to thank Coastline for its commitment to Somalia, as it has fulfilled its promise of investing here, unlike so many other companies. Coastline clearly sees significant opportunity in Somalia and we share its vision. The Federal Government will do all it can to support this project and we want the first exploration well to start as soon as possible.”
Coastline signed the seven PSAs on 19 February. On 21 October it confirmed in a news release that it had received final authorisation to proceed with its exploration program from the competent authorities within the Federal Government of Somalia (“FGS”). As a result, in line with the terms of the PSAs, Coastline has paid the agreed US$7 million signature bonus to the Somali Central Bank, the company said.
Authorisation was granted following conclusion of an in-depth review conducted by the FGS into the process followed by Coastline and by the relevant Somali Ministries and related advisory groups with respect to the signing of the seven PSAs earlier this year.
Coastline estimates that approximately 100,000 barrels of oil a day will flow from each discovered field, assuming exploration succeeds.
Yesterday Coastline held meetings with the following Somali government officials:
Coastline said it has invested over $50 million in Somalia and is committed for the long-term and has been engaged with multiple stakeholders in Somalia since 2018 in respect of its PSAs and plans for the development of the country’s offshore energy industry. Coastline’s PSAs will enable the Company to proceed with plans to explore for oil and gas on the many prospects and leads identified in the waters offshore Somalia.
His Excellency Abdirizak Mohamed, the Minister of Petroleum and Mineral Resources, said: “Having seen how transformational new domestic energy sources have been for other countries in Africa, we are very excited by the potential of these offshore oil fields. Today’s announcement really kick starts the energy industry in Somalia and is a turning point for the development of what is a critical revenue-generating area for the country.”
W. Richard Anderson, Chief Executive of Coastline, commented: “Receiving the clearance authorisation means that we are now able to start our exploration programme. Revenues from the discovery of commercial quantities of oil will be transformative for Somalia from which the government could finance investments in education, infrastructure, healthcare and other vital services, which will benefit all of the people of Somalia, delivering continued economic growth and improving the standard of living.”