Somaliland Oil Discovery, A Welcome Gift to the Horn of Africa

Despite over a decade of oil exploration in the horn of Africa, a working petroleum system, easy access to the market and over 60 wells, the dream of a commercial oil and gas discovery has remained elusive.

While the entire Somalia including Somaliland, which the Federal Government has little or no control of, is covered with sedimentary basins there has been only four prominent hydrocarbon plays at the Dagah Shabelle, Biyo Darer, Bandar Harshau and Dab Qua. The last of these wells drilled after 1990 is the Shabelle-1 by Horn Petroleum which yeided 32.2 API oil and gas shows although the appraisal well Shabelle North 1 turned out dry.

Acknowledged by many geologists is that the basins especially in Somaliland are a continuation of the Arabic plate which has prolific rift basins which have yielded an estimated seven billion barrels of oil to date. It is not a surprise that many oil and gas majors have explored the country before the civil wars and many retain licenses despite declaring force majeure decades ago including Shell and ExxonMobil.

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Due to security reasons and an unstable political environment many companies have shied away choosing to have a wait-and-see attitude leaving the ground to more risk-averse juniors including Coastline Exploration, RAK Gas, Genel Energy, OPIC, Afentra, Jacka Resources among others.

The announcement by Somaliland’s Ministry of Energy and Minerals of an oil find in the Salaxley district will bring much-needed interest in the region expected to have an estimated 30 billion barrels in the just awarded seven blocks to Coastline Exploration. In total Somalia is estimated to hold over 110 billion barrels of oil placing it in the top ten largest reserves globally ahead of the UAE.

This oil dream may however remain a mirage unless the political and security system is streamlined to reduce risks for investors and a clear control structure is established. Just recently the Federal Government of Somalia termed the ongoing exploration by Genel Energy as illegal while Somaliland defended the company PSA citing its Petroleum Act (Upstream Petroleum Act 95/2015).