The agreement between Gulf Oil, a Qatari company, and Gulf Som, a Somali company, focuses on the exploration of onshore oil in several areas of Somalia, including Sool, the Afgoye corridor, and Qoryolle. The primary goal of this collaboration is to identify viable oil reserves in these areas, where the potential for oil reserves has been suggested for decades. This renewed interest has sparked hopes of significant economic benefits for Somalia, a country that has been recovering from political instability and underdevelopment.
Gulf Oil is a notable energy company based in Qatar, with a history of investments in international oil and gas projects. Although it is well-established in the energy sector, Gulf Oil lacks direct experience in drilling operations, which has led the company to form partnerships where necessary. Historically, Gulf Oil has participated in energy ventures across Africa, including Sudan. In Sudan, the company contributed to exploration efforts but did not engage in actual drilling operations. This highlights the company’s tendency to rely on partnerships or external expertise when drilling is required.
Gulf Oil’s strategy has been focused primarily on oil inquiry. When it receives results that may guide drilling, it forms strategic partnerships for the drilling and production-sharing phases. This allows the company to assess opportunities and collaborate with experienced partners for the more complex and capital-intensive processes involved in drilling.
The areas targeted by Gulf Oil and Gulf Som have long been considered potential oil-rich regions. Initial discoveries of oil potential were made decades ago by CONOCO and AMOCO. The potential companies made exploration efforts before the state collapsed; they suspended operations because of force majeure. The Somali Federal Government restarted oil and gas involvement in 2013. The FG contacted companies that had licenses under former governments; most of them expressed a desire to continue with some activities but cited high security risks and poor infrastructure as excuses.
The collapse of Somalia’s government in 1991 further compounded these issues. Civil unrest, the rise of regional warlords, and the presence of insurgent groups such as Al-Shabaab turned Somalia into a no-go zone for foreign investors. Oil companies, including Gulf Oil, were wary of entering a country where security risks were high, and infrastructure was severely underdeveloped. Due to this, Gulf Oil and Gulf Som have benefitted from onshore activities. These factors, combined with a lack of regulatory frameworks and competing claims over resource-rich territories, kept Somalia’s oil potential largely untapped.
During the absence of legal representation in Somalia, some existing companies reached agreements with regional administrations. A lot of research has been conducted, and information is kept in Nugal Valley and Dharoor. On the Somaliland side, after the collapse, three companies started exploration from 2012 to 2013: Australia’s Jack Resources, Anglo-Turkish Genel, and Ophir Energy based in Ras Al-Khaimah. There was also a Norwegian oil and gas company, DNO International, which had no clear data due to Somaliland not being recognized as a state. In Puntland, the administration made an agreement with Australia-based Range Resources for exploration in Nugal Valley and Dharoor in 2005. Range Resources and its partner Horn Petroleum explored but found no significant oil or gas, so the mission failed.
Gulf Som is a company based in Somalia that was established recently. The Somali partner in this agreement is a relatively new player in the energy sector. It lacks significant experience in oil exploration and drilling. Its goal is to advance Somalia’s energy ambitions. The two companies made a Production Sharing Agreement where Gulf Som holds shares in the partnership with Gulf Oil, making it a key stakeholder in the project. Perhaps its primary role is to facilitate operations on the ground, including logistics, security arrangements, and navigating the political and regulatory environment within Somalia.
The agreement between the two companies was formalised in Doha, Qatar, and represents a strategic move to combine resources and expertise. Gulf Oil provides the necessary financial backing, while Gulf Som serves as the local entity that facilitates operations within Somalia. Should the exploration efforts result in the discovery of significant oil reserves, the two companies will begin the drilling process. The FG set up PSA procurement regulation procedures, including a petroleum law that was amended twice by parliament in 2014 and 2019. It also established strategic policy, inviting those who had licenses from previous governments to re-register, demonstrating that the government recognises their licenses. They changed the policy regulations of the blocks, increasing the area from 2 km² to 5 km² and also increasing the block rents. The FG set up a new policy regarding oil and gas to motivate local oil companies to participate in the exploration and drilling process; therefore, they excluded some legal requirements to encourage local companies to invest in local resources until they produce the desired gas and oil resources, though potential companies retreated from agreements due to security risks.
The venue of the agreement was presented by the Minister of Oil, Abdirizaq Omar Mohamud. This may indicate that Gulf Som has full authority to deal with international companies through PSA. The SFG set up the Somali Petroleum Authority, known as the National Petroleum Agencies. Its role includes negotiating blocks of interest before suggesting them to authorised technical control. Although the National Petroleum Agencies were not involved initially, Gulf Som’s decision to partner with Gulf Oil stems from Gulf Oil’s financial strength and international reach, both essential for undertaking the costly and complex processes involved in oil exploration. Moreover, Gulf Oil’s experience in securing contracts and managing partnerships globally makes it an attractive partner for Gulf Som, which is still developing its capabilities in the oil and gas sector.
The renewed focus on oil exploration in Somalia comes with its share of challenges, many of which echo the difficulties faced in earlier decades. The security concerns in Somalia are currently not high, despite improvements in governance and security in some regions; militant groups like Al-Shabaab continue to operate in parts of Somalia, particularly in rural areas where oil reserves are believed to exist. This makes securing exploration sites and protecting personnel a top priority for Gulf Oil and Gulf Som. In fact, security concerns have historically been one of the main reasons for the delay in oil exploration in Somalia, and these risks remain high today.
Lack of infrastructure is another crucial challenge. Infrastructure deficiencies pose a significant challenge to oil exploration in Somalia due to the country’s underdevelopment. Many of the areas targeted for exploration lack adequate roads, pipelines, and transportation networks, making it difficult to transport equipment and personnel to drilling sites. Both Gulf Oil and Gulf Som will likely need to invest in infrastructure improvements if they discover commercially viable reserves.
Oil exploration in Somalia poses environmental risks, particularly in regions where local communities rely on agriculture and pastoralism for their livelihoods. The companies involved will need to conduct thorough environmental assessments and engage with local communities to ensure that their operations do not disrupt traditional ways of life. If these concerns are not addressed, the companies may face opposition from local populations.
Somalia’s legal framework for oil exploration is still developing, and there are often competing claims over resource-rich areas between the central government and regional administrations. This legal uncertainty can complicate negotiations and ownership rights, especially if reserves are discovered in contested federal resource-sharing areas.
Despite the challenges, this partnership represents a major step forward for Somalia’s energy sector. The potential oil reserves could transform Somalia’s economy, providing much-needed revenue for development and growth. However, Somalia will need to navigate political instability, infrastructure challenges, and environmental concerns carefully. If they succeed, the benefits could be immense, both for the federal government and the federal states.
Author: A.Bari Zaki
Contact info: abdibari311@gmail.com
Twitter X: @BariZaki65
The views expressed in this article belong to the author and do not necessarily reflect the editorial policy of Horn Broadcasting Network.