Somali Petroleum Law

In the first of three explainer videos, we look at the Petroleum Law which was established in 2020.

The law is designed to ensure that Somalia’s petroleum resources are maximised for the benefit of the Somali people whilst establishing a robust framework for governance. The remaining videos will look at the Production Sharing Agreement (PSA) and how Somalia will benefit from its natural resources over the longer term.

Below is a transcript of the video.


In 2020, the President of Somalia signed a landmark petroleum law that opens the door to international petroleum investors.

The law covers a number of critical questions:

1. Who owns the Natural Resources?
2. How do we protect the environment?
3. Who can issue petroleum licenses for exploration?
4. What about damage compensation?
5. How is the income shared?
6. Establishment of the Somali Petroleum Authority (SPA) (Article 19)

Any petroleum discovery belongs to the Somali people


In 2018, the Council of Ministers’ Directive No-047 endorsed a landmark resource sharing agreement, signed by the Somali Federal Government and Somali Federal Member State.

The agreement covers:

i) Who owns the resource?
ii) How is the money shared?
iii) How is the revenue managed?
iv) Who manages the resource?

The SPA is a non-political regulatory body with representatives from both the federal government and member states.

The Somali Petroleum Authority is managed by 9 board members; representatives from each of the 7 Member States, including Somaliland, and 2 from the Federal Government.

The SPA Chairman has oversight of all activities.

The SPA reviews all Production Sharing agreements with international investors to ensure they serve Somalia’s best interests.


The first Somali Model PSA was introduced in 2013; however, it was never endorsed due to a lack of seismic data, legislative framework, or a resource sharing agreement.

The technical and financial elements of the Model PSA are overseen by the Inter-Ministerial Concessions Committee (‘’IMCC’’) with representatives from other Somali institutions as well as other stakeholders, including the Financial Governance Committee (FGC), Governor Central Bank of Somalia and the African Development Bank (ALSF), and the council of ministries:

Ministry of Finance, Ministry of Justice, Ministry of Commerce, and Investment, Ministry of Planning, Ministry of Foreign Affairs and Somali Attorney General.

Measures to ensure fair governance
The PSA is governed with integrity.


Vetting before any commercial negotiation


Interested companies purchase data, generating revenue to the Somali government


The company takes on the financial risk, paying commercial development, training and surface rental fees.

The PSA covers:

Domestic supply obligations
Employment and Training
Imports and Exports
Fees and Bonuses
Economic Stabilisation
Indemnity & Force Majeure
Tax and Royalties

Transparent governance is key to the future of a stable petroleum industry for Somalia

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