Ethiopian Business Review

Soma Oil abd Gas hopeful on its deal with the Somalia Government

Soma Oil & Gas, a UK-based company established to survey and explore oil and gas potential in Somalia, is the first to sign an oil deal with the new Somali government. The East African country has suffered from years of political unrest and violence since a civil war broke out in 1991, but saw the formation of an internationally recognized government with the inauguration of President Hassan Sheikh Mohamud in September last year.

Soma, which was only established this year, is headed by chairman Michael Howard, a former Conservative Party leader who has held various cabinet positions in British government, and CEO Robert Sheppard, an ex-BP executive with over 40 years’ experience in the energy sector.

According to Sheppard, Somalia’s oil and gas potential is relatively under-explored, and with recent discoveries in East African countries such as Tanzania and Kenya, Soma is reportedly investing over USD 20 million in exploring Somalia’s oil and gas potential. In addition, Sheppard said that the company believes Somalia is beginning to move in a positive direction under its new central government.

“There are green shoots of economic development, there are green shoots of stability, and we combine that with the exploration prospectively and for a first-mover… to fill that space very quickly I think is to Soma’s advantage.”

He added that Soma’s activities will be primarily devoted to offshore surveying and exploration. “That gives us more control over the environment and then diminishes the risk in that sense.”

Prior to the civil war, a number of major oil companies including Shell and Total had claimed and signed deals for oil blocks, and according to statements by Soma, the company will not impinge on these areas.

Concerns have been raised over Soma being picked for such a deal over more experienced oil players. The East African Energy Forum, a lobby group which seemingly aims to protect the natural resources and sovereignty of Somalia, has accused Soma’s deal of not being transparent. In addition, it has questioned Soma’s capacity and capability, considering that the company is only a few months old.

“I’m not sure what their concerns are,” Sheppard responded. “The transparency issues are pretty clear. We’ve got an open arrangement.” (How We Made it in Africa)

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