Home » After months of dispute, Somalia and the United States concludes a controversial oil deal

After months of dispute, Somalia and the United States concludes a controversial oil deal

by Admin

Somalia has finalized its $7m (£6.2m) oil-production-sharing deal with the US firm Coastline Exploration.
Coastline Exploration is an upstream oil and gas company focused on East Africa. The company announced on Friday that it had paid the government a $7 million signature bonus and would now proceed with exploration.

The deal was green-lit following months of amendments to the original agreement. In February 2022, the Somalian administration, heralded by the previous Somali president and prime minister, disputed the signing of any such contract, declaring it illegal.

William R Anderson and Mohamed Abdulahi Mohamed

According to the BBC, the deal was declared illegal owing to the country’s law of suspending such agreements during the election period.

The report by the BBC reads; “At the time Villa Somalia, the presidential palace in Mogadishu, declared the agreement null and void, citing a presidential decree that barred government agencies from entering into international contracts during the election period.”

Abdirashid Mohamed Ahmed, Somalia’s minister of petroleum and mineral resources, and Richard Anderson, chief executive officer of Coastline Exploration Ltd., signed the agreement. But in separate statements, Somali President Mohamed Abdullahi Mohamed, known as Farmaajo, and Prime Minister Mohamed Hussein Roble rejected the deal, declaring it “null and void.”

The CEO of Coastline Exploration at the time stressed that he believed the deal was legal owing to the reassurance he got from Somalia’s petroleum minister. He stated that he did not directly communicate with either the president or the prime minister, but the minister of petroleum and members of the SPA assured his organization that both leaders were aware of it.

At the time, Mohamed Abdullahi Mohamed resided as the country’s president but lost to Hassan Sheikh Mohamud.

However, a statement released by Coastline Exploration states that Somalia, under its current administration just signed the petroleum exploration agreement for seven offshore blocks with United States-based Coastline Exploration.

In 2019, Somalia passed a petroleum sector law paving the way for exploration, especially off its coast.

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