H.E. Abdirashid Mohamed Ahmed, the Minister of Petroleum and Mineral Resources of Somalia, will return to Africa’s premier event for the energy sector, African Energy Week (AEW), which will take place from 18 – 21 October 2022 in Cape Town. Representing one of Africa’s most underexplored markets, H.E. Ahmed remains focused on frontier exploration as he seeks global investment to kickstart the country’s high potential sector.
An engineer by profession, H.E. Ahmed is leading efforts by the Somalian government to increase oil and gas exploration through investment as well as the participation of international oil companies (IOC). Due to Somalia’s close proximity to hydrocarbon-rich Arab countries such as Yemen and Saudi Arabia, stakeholders are highly optimistic about the country’s potential reserves. What’s more, past seismic data processed by energy insight company, TGS, have indicated the presence of up to 30 billion barrels of oil reserves in blocks 152, 153, 164, 165, 177, 178, and 204, which the Ministry of Petroleum and Mineral Resources offered for exploration in 2020 under the country’s first offshore licensing round. The country is also estimated to house an estimated 0.20 trillion of natural gas reserves, however, exploration and production has been hindered by political instability and a lack of adequate investments.
As a result, the Ministry of Petroleum and Mineral Resources, under the leadership of H.E. Ahmed aims to change this and has in recent years focused on reforming the country’s regulatory framework with the introduction of the Somali Petroleum Law in 2020 which is designed to maximize the exploration and exploitation of hydrocarbons and to promote increased cooperation between IOCs and consortiums. In addition, the ministry established the Somali National Oil Company and the Somali Petroleum Authority to operate and regulate the sector – in line with the government’s strategy to develop an investment-attractive regime. Furthermore, the Revenue-Sharing Agreement was developed to detail how revenues generated from oil and gas would be supervised and managed.
In the wake of these regulatory reforms, Somalia’s oil market has recorded impressive growth rates and increasing stability in recent years. In this regard, the government is optimistic that global oil majors such as Shell and ExxonMobil will resume their operations in key offshore basins– the two majors had declared force majeure, but in 2019 paid $1.7 million to lease offshore blocks for the next 30 years. The ministry is also expected to award exploration licenses for the remaining eight blocks that were part of the country’s first offshore licensing round in 2020 but were delayed due to the pandemic and calls by industry stakeholders to extend the bidding period.
With statutory bodies now in place to negotiate oil exploration and production deals, the ministry is now prioritizing bringing companies with the right expertise and capabilities on board. By exploiting its energy resources, Somalia could become a regional, continental and international energy hub. With only 36% of Somalia’s population having access to electricity in 2019, according to the Energy Progress Report, hydrocarbon resources present a huge opportunity for the country to address its domestic energy needs.
With H.E. Ahmed once again attending and participating at AEW in 2022, an opportunity has risen for the minister, investors and energy companies to discuss opportunities within Somalia’s energy sector and to negotiate and sign deals that can completely change the country’s energy and economic trajectory.
“The progress made by H.E. Abdirashid Mohamed Ahmed and his ministry in reforming Somalia’s energy policies in recent years is remarkable,” states NJ Ayuk, Executive Chairman of the AEC, adding that, “The next phase now needs to be the rapid signing of deals and exploitation of hydrocarbons. With the investment window for hydrocarbons quickly closing, AEW 2022 provides the perfect platform for the Somalian government and companies and investors interested in maximizing the significant opportunities present within the country to discuss, negotiate and close deals.”