Hydrocarbon industry for Somalia

Government and, by extension, the Somali People share in fees, rentals and support payments, during exploration and then during development periods share in royalty, profit sharing and tax revenues for all commercial petroleum discoveries.

Exploration and Production companies (E&P), typically invest millions of US dollars each year to explore for hydrocarbons relying on seismic surveys and other geological and geophysical date and techniques to drill exploration wells. During this phase, the E&P company pays the Government hundreds of thousands of US dollars in annual rental fees and various capacity-building funds and bonuses.

The E&P company invests billions of US dollars in the development phase of a commercial discovery. The development phase continues for the life of the production from the field, typically over several decades.

The Somali Production Sharing Agreement (PSA) fiscal terms negotiated with the E&P company determine how the revenue from production is shared with the Government.

The Somali economy will also benefit from the development of support services for the oil and gas industry.

New onshore infrastructure will need to be constructed and which will provide employment for many hundreds of Somalis in the following sectors:
  1. Heliports at regional airports for transport to/from offshore rigs, warehousing, seaport, warehousing, offices & workshops and training centres

  2. Development of onshore service sector: food, catering, hotels and security

  3. Development of oilfield service support facilities: offices, workshops, storage yards

  4. Opportunities for Somalis to open new businesses to support the oil and gas industry

  5. Pull-through of other industry sectors bringing more investment into Somalia

The Somali economy will also benefit from additional training of the labour force through the development of a skilled labour force and creation of employment and entrepreneurial opportunities which will encourage the return of qualified diaspora professionals to Somalia.