by Abdulkadir Aden Mohamud, CEO and Chairman
Somalia stands poised to capitalise on an unprecedented opportunity, surpassing through its oil exploration even the considerable success of its neighbours. The country’s offshore waters may contain at least 30 billion barrels of oil reserves, according to Spectrum Geo, a company that conducted a seismic data study of Somalia’s offshore basins in 2014-2015.
In anticipation of the possible discovery of major hydrocarbon reserves, the Somali Petroleum Authority (SPA) was established in 2020, in accordance with the Petroleum Law ratified by the country’s President earlier that year. The SPA’s objective is to review seismic data, exploration and development activity, appraisal, production, and decommissioning agreements with international petroleum companies to ensure that they are not only internationally competitive but also serve the best interests of the Somali people.
In particular, the SPA has an opportunity to demonstrate the role that it can play in driving Somalia’s contribution to achieving the United Nations Sustainable Development Goals and supporting the world through the current energy crisis.
Through the Somali Petroleum Law, the landmark Revenue Sharing Agreement, and the work of the SPA, we are able to demonstrate and make discoveries that will lead to oil production in Somalia. This has the potential to deliver significant advances towards in at least seven of the 17 SDGs for 2030 – namely to reduce poverty, increase good health and wellbeing, provide quality education, deliver affordable and clean energy, provide decent work and economic growth, deliver sustainable and reliable infrastructure and reduce poverty and inequality. We believe revenue generated from the oil and gas sector will be invested in other industries, including agriculture, livestock, and aquaculture.
The development of human capital is the critical determinant of our long-term growth and prosperity. As our nascent oil and gas industry develops, significant international investment in Somalia will provide opportunities for local businesses to participate in the supply chain and field support the industry will certainly require. We are lucky to be endowed with entrepreneurs who have shown themselves able to flourish despite all the challenges presented by our recent history, and I am convinced that this new industry will offer them huge opportunities to develop and grow their capabilities. With 70% of our population under the age of 30, our young people are also anxious to take direct advantage of the high-quality jobs that international partners will bring.
Currently, three million Somali children are estimated to not have an access to formal education, and only half the population is literate. The Government has made significant progress in recent years and The Ministry of Education, Culture, and Higher Education has initiated a range of positive steps, including the rollout of a national curriculum based on the Somali language. Collaboration is key for the future of Somalia, and we are committed to working closely with the other Ministries and Member States to develop high skill jobs for Somalis. Each production sharing agreement will generate substantial investment for the training of young people to work in the oil and gas sector.
Somalia has the potential to be a regional economic hub – in part due to its strategic geographic location, with the longest coastline in Africa. If we are able to unlock our natural resources, substantial funds will become available for use in key development areas, such as health, water, education, energy, and transport. Throughout this process, we will collaborate closely with key international partners such as the African Development Bank. The SPA will play a pivotal role in all of this – with representatives from Member States having oversight over how, and where, resources will be invested for the long-term benefit of local communities.
Whilst we cannot attain all the Sustainable Development Goals without international support, we are conscious of our responsibility to our people and the environment, and we will continue to advocate for the sustainable and responsible exploration and production of any potential hydrocarbon reserves. Somalia has extensive environmental and marine assets, with, for example, the opportunity to significantly develop our fishing industry. It is important to note that any development of our potential hydrocarbon assets will be carefully managed, with the protection of marine life and the environment one of the top priorities. Alongside this commitment, the revenue sharing agreement recognises the potential disruption to those close to the exploration sites and has allocated a higher percentage of revenues to those affected.
We have a long way to go, but Somalia is making progress to deliver for all its people, and I am pleased and proud that the SPA will play such an important part in this – as an advocate and guardian of fairness and due process.