UK-based, Somalia-focused exploration firm Soma Oil & Gas Exploration has completed an offshore seismic acquisition program, which commenced in February 2014.
The acquisition program was carried out by SeaBird Exploration and concluded in June 2014, with over 20,500 line-km of 2D seismic data having been acquired across a 122,000sq km offshore evaluation area. Processing the seismic data is expected to take until late 2014 to complete.
Seabird used wo survey vessels, Northern Explorer and Hawk Explorer, to acquire the data.
There has been little activity in Somalia for some time. Prior to 1991, a number of international oil companies were granted licences before declaring Force Majeure.
Soma Oil & Gas was founded in 2013 with the intention to explore Somalia. Its chairman is Lord Howard of Lympne, a former conservative minister who served as Home Seccretary in the UK Government. Soma will provide the processed seismic data to the Ministry of Petroleum & Mineral Resources, Federal Government of Somalia for use by the Ministry and storage in the Ministry’s data room in Mogadishu.
Under the terms of the seismic option agreement signed by the Ministry and the company, Soma Oil & Gas has the right to apply for production sharing agreements for an area of up to 60,000sq km.
Robert Sheppard, CEO of Soma Oil & Gas, said: “The completion of the 2D seismic acquisition program is a significant milestone for both Soma Oil & Gas and the Federal Government of Somalia. The quantity and quality of seismic data acquired is at the top end of our expectations and importantly we have managed to complete the seismic acquisition program with no security or HSE incidents.
"Our efforts are now focused on the processing, reprocessing and interpretation of the seismic data in order to identify leads and prospects by the end of 2014. At that point, Soma Oil & Gas will be ready to apply for PSAs in the areas of most interest to the company.
"Somalia remains a significantly under-explored region despite large recent discoveries elsewhere in East Africa and Madagascar and we are continuing to assist the Federal Government of Somalia in accelerating the development of its oil and gas potential.”
H.E. Daud Mohamed Omar, Minister of Petroleum & Mineral Resources, said: “This significant milestone not only demonstrates the Federal Government’s commitment to re-opening Somalia’s oil and gas industry which will see economic and social developments for the country and the people of Somalia, but further confirms that the historic security risks associated with Somalia are continuing to diminish.
"The Federal Government is looking forward to further developing the hydrocarbons industry and engaging with international oil companies to conduct exploration work in Somalia.”
Somalia's hydrocarbon potential remains to be explored amid political instability, says GlobalData analyst
Somalia’s upstream oil and gas industry will benefit from greater investor confidence and undergo subsequent growth in the years to come, if the Somalian government provides the political stability, security and infrastructure required for large-scale upstream development, according to an analyst with research and consulting firm GlobalData.
John Sisa, Lead Upstream Analyst for GlobalData, says that after emerging from two decades of civil war and establishing a central government, Hassan Sheikh Mohamoud, president of the Federal Government of Somalia (FGS), now has one eye on the promise of petro-revenues and another on establishing authority over the regional governments.
However, while one of the first actions taken by the FGS was to declare the illegality of all oil and gas contracts signed by the regional governments, Sisa believes that the potential growth of Somalia’s oil and gas industry depends highly on a cooperative definition of the Somali Petroleum Law between both sides.
The analyst says: “A degree of contract sanctity will be viewed positively by the industry with respect to active contract holders, but a working relationship between the federal and regional governments is crucial for this.
“Recently, the Somaliland government granted consent to Sterling Energy to acquire a 40% interest in the production sharing agreement (PSA) covering Block SL6 and part of Blocks SL7 and SL10 from Petrosoma and Jacka Resources. This transaction’s approval will be a test of the sovereignty of the FGS’s new federal constitution, since the FGS was not consulted over this.”
Currently, Genel Energy holds interests in two PSAs covering five blocks in Somaliland, while Africa Oil holds exploration interests in two PSAs for two blocks in Puntland, says GlobalData. The central government plans to sign at least 30 production-sharing contracts by the end of 2014, which will replace these and all other existing contracts, it adds.
Sisa continues: “Based on the Somali draft PSA, the central government will collect a share of revenues between 55% and 60%, if at least 50 million barrels of crude oil recoverable reserves are discovered. This will equate to a substantial return for the government.
“However, Somalia’s governmental authority remains fragile, and existing local clan militias, Al-Shaabab Islamists and pirates could interfere or attempt to assert control over hydrocarbon resources. This would result in increased uncertainty, higher risk and delays to exploration in the region.”
GlobalData's analyst believes that a successful resolution of the pressing issues between the FGS and Somaliland governments will help to increase political stability and security, and therefore encourage further investment in the region’s oil and gas exploration industry. Only once this is achieved will upstream development be able to commence.