Somalia reopens to oil majors

Big oil groups that declared force majeure and quit Somalia 16 years ago will be given the chance to resume their activities under the anarchic country’s proposed hydrocarbon law.

According to a parliamentary bill, companies that held concessions before December 30 1990, would be given the right to return to those areas under new production-sharing agreements. The new production deals will set out different financial terms, exploration periods and obligations as well as new block sizes.
“A prior grant in the form of a concession entitling the prior contractor to conduct exclusive petroleum operations shall be convertible into a production-sharing agreement,” the draft law says.

Several western oil majors — Royal Dutch Shell, BP, ConocoPhillips, Chevron, ENI — held Somalian exploration concessions in the 1980s before leaving in 1991 when warlords toppled dictator Mohamed Siad Barre and the country descended into lawlessness.

The draft law, awaiting parliamentary debate, gives previous concession holders a year from the time the law comes into effect to sign up for a production-sharing agreement. It was not immediately clear whether any of the western oil majors would consider returning to a country that has become a byword for violence.

Business Day