Somalia does not have the capacity and requisite legal framework to engage international oil companies to start oil drilling, a senior government official has said warning the anticipated bid rounds slated for February could compromise the country’s interests and drive away potential investors.

On the 7th of February in London, Somalia is going to be holding the first licensing rounds of multiple acreages that have at its disposal of 206 oil blocks and will be auctioning blocks in southern Somalia.

According to Spectrum Geo which completed its acquisition of 2D seismic data offshore in Somalia in May 2016, the Ministry of Petroleum will unveil the final block delineation, expected to consist of up to 50 blocks covering a total area of over 173,000 km2.

Spectrum adds that the government will also ‘reveal the legal and regulatory framework, petroleum laws, local capacity, fiscal terms, round timings and other conditions.’

Spectrum acquired 2D seismic data covering 20,582.75 km adding to 20,500 km sail lines by Seabird Exploration under contract from British explore Soma Oil and Gas in 2014.

Up to present Somalia don’t have qualified and trained Negotiation Team/Committee that can handle negotiations and protect the interest of Somalia in producing a fair deal/contract with the International Oil Companies.

The fiscal terms in the Petroleum Bill are not based on existing law.  The royalty,   Corporate Income Tax, Profit-based Special Tax and other taxes (if existing)  were designed a long time ago and applied to this modern day where the market environment is very competitive and where the petroleum industry is changing by the day.

“Prior to anything, the legal regime of Somalia and its instrument should be in harmony with each other.    Starting from the    Constitution,     the Petroleum bill, Legislations on the environment and the   Somali Petroleum    Authority  and the  Model Production  Sharing Agreement and any new Tax Code  – all should complement    each other   and  should   not contradict.

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