Somali Petroleum Minister Sees Start of Oil, Gas Output by 2020

Somali Petroleum Minister Sees Start of Oil, Gas Output by 2020

Somalia may start producing oil and gas by 2020 after exploration work showed the potential for “huge” deposits of the resources in the Horn of Africa country, outgoing Petroleum Minister Da’ud Mohamed Omar said.

“We expect that Somalia will produce oil and gas in 2020 and the nation will reap enormous benefits such as alleviating the poverty and leading the country into prosperity,” Omar told reporters Wednesday in the capital, Mogadishu. He didn’t identify which oil companies are carrying out exploration work in the country.

Somalia is considering its first bidding round for oil blocks since 2009 as increasing stability begins to attract more foreign investors. African Union-backed government forces have regained control of about 70 percent of the country that had fallen under the control of al-Shabaab, the al-Qaeda-linked militant group seeking to create an Islamic state in Somalia.

The government is in talks with companies including Royal Dutch Shell Plc, Exxon Mobil Corp., BP Plc and Chevron Corp. about reactivating dormant contracts in the country, according to J. Jay Park, managing director of Petroleum Regimes Advisory, who provides legal advice to the government. Oil companies haven’t operated in the country since civil war erupted in 1991 and they were forced to declare force majeure.

Omar said in October that he expects the country to begin producing oil and gas within six years. He is being replaced by Mahamed Mukhtar Ibrahim, who was appointed as minister in a new cabinet announced by Prime Minister Omar Abdirashid Ali last week.

While Somalia has no proven oil reserves, drillers are betting the country has a geology similar to that of Yemen, which lies across the Gulf of Aden and has 3 billion barrels of proven oil reserves, according to the BP Statistical Review of World Energy.