The Somali president has approved Coastline Exploration to move ahead with its plans for the country, following a tumultuous electoral period.
Somali President Hassan Sheikh Mohamud approved the seven production-sharing agreements (PSAs), Coastline said. As a result, the company will now pay a $7 million signature bonus to Somalia and begin the exploration process.
“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 president said.
“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 has said that, following the required payments to the government, it would shoot 2D seismic data and drill an exploration well.
The government carried out an in-depth review of the award process, which saw the licences agreed in February.
In April, the then president Mohamed Abdullahi described the Coastline deal as invalid. Other officials said it was illegal.
The Somali Petroleum Authority (SPA) rejected the criticism, saying the president did not have the grounds to comment on the deal. At that point, the Somali government’s term had ended in the run up to elections, held in May.
A statement from the government said five points had been altered from the original agreement.
MOPMR has officially reviewed the Production Sharing Agreement according to legal Advice from experts. Amendments have been made and signed by both Minister @AbdirizakOm and the CEO of Coastline Exploration @coastline_explo. #Somalia is ready for investment! @TheVillaSomalia pic.twitter.com/ZXfm3O0taT
— Mohamud Mashruuc (@DrMashruuc) October 20, 2022
Coastline CEO William Anderson welcomed the approval. “Revenues from the discovery of commercial quantities of oil will be transformative for Somalia”, he said.
The non-executive chairman Jacob Ulrich said Coastline was confident that it would discover “major energy reserves” in the East African country.
“With the right partners in place and a supportive government, Somalia’s nascent energy industry can look to the future with confidence now that there is a clear road map to potentially securing a sustained domestic oil and gas supply,” he said.
The statement went on to say that Coastline hopes to find multiple offshore oilfields and that each discovered field could produce 100,000 barrels per day of oil.
The company has identified prospects and leads offshore Somalia, it said.
TGS is offering seismic information on the offshore from 2D surveys shot in 2014 and 2015. No deepwater wells have been drilled off Somalia.
Coastline has said the seismic suggests “large geological structures and indications of equally large stratigraphic traps offshore Somalia”.