Indonesia, Kuwait eye proposed Somali oil firm

Somalia is considering creating a state petroleum firm with a 49 percent stake for Indonesia’s PT Medco Energi Internasional Tbk and Kuwait Energy Company, according to documents obtained by Reuters.

The government documents, titled “Somalia Petroleum Policy”, indicate that the two firms would acquire their stake in Somalia Petroleum Corporation on August 31.
That, however, would be dependent on the passing of a national oil law awaiting parliamentary debate, analysts say.

Prime Minister Ali Mohamed Gedi is believed to be keen to see the draft law governing oil and gas exploration in the fractured Horn of Africa country enacted quickly. The bill was approved by his council of ministers in February.

The documents seen by Reuters also state that Somalia’s petroleum minister would approve three out of seven directors to the new firm — two from Medco and one from Kuwait Energy.

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“The government could undertake this”, the documents said, were it not for the expense — with wells costing between $4 million-$30 million each — the risk involved when nine out of 10 exploratory wells are dry; and lack of specialised knowledge.

“The Somali Republic currently lacks the financial and technical resources to explore for oil by itself,” the papers said. “There are foreign enterprises who are qualified financially and technically to do so, and are prepared to take the explorations risks involved.”

Javno