Somaliland oil explorations delayed as companies await Oil Protection Unit

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Sterling energy which has operations in the Odewayne block has said it has halted its operations in the horn of African country until the country establishes an oil protection unit.

Sterling whose interest in Somaliland are carried by Genel Energy says among activities delayed include seismic and drilling which currently cannot be operated safely.

“Operations in Somaliland have been delayed while the Government of the Republic of Somaliland establishes a trained and equipped Oilfield Protection Unit (“OPU”) that can provide the level of security required by the in-country operators so that future seismic and drilling operations can be conducted safely,” says Sterling Energy chairman Alastair Beardsall.

Sterling is currently on its third period of the Odewayne Production Contract which expires in November 2016, with an outstanding minimum work obligation of 500 km of 2D seismic.

The Third Period of the PSC was recently extended by two years in order to allow time for the OPU to be established. The OPU is expected to be operational in 2015.

The Fourth Period expires in May 2018, with a minimum work obligation of 1,000 km of 2D seismic and one exploration well.

In March this year Somaliland government officials led by the Minister of Energy and Minerals Hon. Hussein Abdi Dualeh and the representatives of four international oil companies namely Genel, DNO, RAK GAS, ANSAN WIKFI discussed ways to accelerate oil exploration and extraction in the country in 2014 .

The Government of Somaliland announced it had plans to form a special security unit known as “Somaliland Oil Protection Unit” which would guard oil exploration installations, and protect workers in the industry and their transportation systems.

In December 2013 Sterling completed the acquisition of an initial 10% interest in the PSC for the Odewayne block, located onshore Somaliland, and has subsequently completed two further transactions, in January and May 2014, to acquire an additional 30%.

Sterling now holds a 40% carried interest in the Odewayne PSC, with the cost of the exploration work programme for Periods 3 and 4 under the Odewayne PSC paid by Genel Energy Somaliland Limited.

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