“Positively Altered Trajectory or Mere Mirage? Unraveling the Mystifying Impact of Oil Discovery on Somalia’s Economic Prospects.”
Do you comprehend the possibility of Somalia’s economic future shifting due to the discovery of oil? For decades, Somalia has been faced with instability, relying heavily on foreign aid due to the Al-Shabaab terrorist organization ravaging the country, leading to an insufficient amount of revenue collection. Somalia’s exploration of oil and gas along its coast with ExxonMobil and Shell prior to the collapse of the state dwindled over the years, resulting in the nation solely depending on foreign oil and gas imports.
However, Houston-based Coastline Exploration has reignited the effort to explore oil and gas in Somalia. The group has obtained seven offshore oil blocks, with the Chief Executive Officer, Richard Anderson, stating optimistic prospects of discovering more oil in the country, providing the potential for multiple tens of billions of barrels to be recovered. Coastline paid seven million dollars for the blocks and will begin 3D seismic exploration in November, anticipating drilling in mid-2025. This development has even caused ExxonMobil and Shell to attempt a comeback to Somalia.
Based on 2D seismic work conducted by TGS in 2014, there may be 30 billion barrels of crude across 15 blocks originally offered by Somalia’s government. The ongoing conflict between Russia and Ukraine has even caused a scramble for hydrocarbons along the East African coastline. President Hassan Sheikh Mohamud celebrated the Coastline deal in October, stating that it marks a significant step forward for Somalia in the development of its energy sector, which would provide substantial benefits for the country.
Coastline initially declared in February that it had signed PSAs for seven blocks correlating to 35,000 square km, two years after Somalia’s first offshore round, which was nullified by Mohamud’s predecessor. After taking office, Mohamud granted approval and signed an agreement with Somalia’s distinct states, potentially stopping internal conflict. Anderson anticipates that Coastline’s project will progress in November, with the next phase being to conduct a 3D seismic survey between November and March before processing it over three to four months. Crude discoveries could “change the geopolitical balance” in the region and should not be missed by the Somali people.
Analysts have projected that if more oil and gas are discovered, Somalia’s economy will considerably grow, potentially leading to the exportation of commodities in the future. Recently, Somalia has won a legal case against Kenya regarding the controversial Indian Ocean maritime border at the International Court of Justice.