Coastline Exploration signs seven Production Sharing Agreements in the Federal Republic of Somalia

Economy, Development & Health Economy, Development & Trade
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News provided by

Coastline Exploration Limited

Feb 19, 2022, 07:00 ET

HOUSTON, Feb. 19, 2022 /PRNewswire/ – Coastline Exploration Limited (“Coastline”), the upstream oil and gas company focused on East Africa, announces that it has signed seven Production Sharing Agreements (“PSAs”) covering offshore, deep-water blocks of the Federal Republic of Somalia. These PSAs enable Coastline to proceed with plans to explore for oil and gas on the many prospects and leads identified in these offshore blocks.

W. Richard Anderson, Chief Executive of Coastline, commented, “Somalia contains the largest remaining unexplored set of basins situated in warm waters in the world. We are honoured and excited to be part of its future development. The Government of Somalia and the Ministry of Petroleum have spent a great deal of time and effort to ensure the country has the proper legal and administrative infrastructure to support oil and gas exploration with the passing of the Petroleum Law, adoption of the Revenue Sharing Agreement among the Federal Government and its Members States and the establishment of the Somali Petroleum Authority to provide continuing support for the anticipated growth in the sector.”

Jake UIrich, Coastline’s Chairman, continued “After a rigorous negotiating process, we are delighted to have signed these inaugural PSAs with the Somali Government. This marks a defining moment for the country. The way is now open for other oil and gas companies to join us in our quest for commercial discoveries through the current licensing round and, also through direct negotiations with the Somali oil and gas authorities. Revenues from the discovery of commercial quantities of hydrocarbons could be a major positive for Somalia from which the government could finance investments in education, infrastructure, healthcare and other vital services, which will benefit all of the people of Somalia, including women and minorities, by helping provide for continued economic growth and improving the standard of living.”

The signing ceremony was witnessed, amongst others, by the Chairman & CEO and Vice-Chair of the Somali Petroleum Authority who highlighted their desire for the expected economic and social benefits for the Somali people.

About Coastline Exploration

Founded in 2018, Coastline Exploration was established to help develop the hydrocarbon industry within East Africa. Following the discovery of commercial quantities of oil in Kenya and Uganda, coupled with world-class offshore gas reserves in Tanzania and Mozambique, Coastline Exploration believes there is huge potential for further significant oil and gas discoveries across the region.

www.coastlineexploration.com

Enquiries
Hudson Sandler
Dan de Belder/Francis Kerrigan
+44 (0)207 796 4133
Email: [email protected]

SOURCE Coastline Exploration Limited

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This deal went completely shit​:joy::joy::joy:

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It sums up Mogadishu totally.

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The Somali president has approved Coastline Exploration to move ahead with its plans for the country, following a tumultuous electoral period.

Somali President Hassan Sheikh Mohamud approved the seven production-sharing agreements (PSAs), Coastline said. As a result, the company will now pay a $7 million signature bonus to Somalia and begin the exploration process.

“I would like to thank Coastline for its commitment to Somalia, as it has fulfilled its promise of investing here, unlike so many other companies. Coastline clearly sees significant opportunity in Somalia and we share its vision,” the president said.

“The Federal Government will do all it can to support this project and we want the first exploration well to start as soon as possible.”

Coastline has said that, following the required payments to the government, it would shoot 2D seismic data and drill an exploration well.

The government carried out an in-depth review of the award process, which saw the licences agreed in February.

In April, the then president Mohamed Abdullahi described the Coastline deal as invalid. Other officials said it was illegal.

The Somali Petroleum Authority (SPA) rejected the criticism, saying the president did not have the grounds to comment on the deal. At that point, the Somali government’s term had ended in the run up to elections, held in May.

A statement from the government said five points had been altered from the original agreement.

Major reserves​

Coastline CEO William Anderson welcomed the approval. “Revenues from the discovery of commercial quantities of oil will be transformative for Somalia”, he said.

The non-executive chairman Jacob Ulrich said Coastline was confident that it would discover “major energy reserves” in the East African country.

“With the right partners in place and a supportive government, Somalia’s nascent energy industry can look to the future with confidence now that there is a clear road map to potentially securing a sustained domestic oil and gas supply,” he said.

The statement went on to say that Coastline hopes to find multiple offshore oilfields and that each discovered field could produce 100,000 barrels per day of oil.

The company has identified prospects and leads offshore Somalia, it said.

TGS is offering seismic information on the offshore from 2D surveys shot in 2014 and 2015. No deepwater wells have been drilled off Somalia.

Coastline has said the seismic suggests “large geological structures and indications of equally large stratigraphic traps offshore Somalia”.

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In an interview with VOA, Anderson said that Coastline Exploration did not directly communicate with the president or the prime minister but was assured by the minister of petroleum and [SPA members] that both leaders “were aware of the process and they were fine with the signing.”

According to Anderson, the original contract terms are a 50-50 profit split, and Coastline pays a 30% income tax on whatever profits it makes. There is also a 5% royalty for the government. All the terms of the PSAs, including the profit-sharing percentage, are fixed for their 30-year term and will not change during the contract’s life.

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That is an unconventional PSA. Because normally, the Oil Company keeps majority of profits and as time goes the majority is transferred to the State very much like a Bank mortgage.

It is a huge win for Somalia in this case as they get more of the money upfront as they need it now more than anytime.

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We are talking offshore on one of the windiest parts in the world. It’s will take a lot of money and time. You saw Eni literrally exploring for nearly a decade offshore Kenya and still have nothing to show for it. Like you said this is a good SPA. So oil must be seeping out of the ocean floor!

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Optimistic?

Who will be the President in 6/7 years? If we thought the last presidential “race” was tumultuous the next one should be interesting.

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The first exploration well was drilled in Somaliland in the early 1950s, followed by approximately 60 wells drilled from 1950 through 1980 – only four wells were drilled. No oil gas wells have been drilled since 1991 due to the civil war.

Of all the wells drilled, four had oil shows (all in Somaliland), eleven had gas shows but only one had evidence of a commercial gas discovery (onshore near Mogadishu).

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Cost recovery :hear_no_evil: :speak_no_evil: :see_no_evil:

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