Oil: Somalia settles dispute with Shell and Exxon Mobil

The resolution of the dispute between the Mogadishu authorities and the joint venture between Royal Dutch Shell and Exxon Mobil over the payment of exploration licence fees, announced in late June by the Somali Ministry of Petroleum, has found its epilogue.

In a statement issued on Friday, October 25, SONNA, the Somali national news agency, reported that the two majors had paid « $1.7 million to Somalia for the rental of offshore blocks for a period of 30 years ». The agreement settles a long-standing dispute over royalties due by the joint venture between 1990 and 2008 for the exploration licence of five offshore blocks, and comes as Somalia continues its efforts to develop its oil potential.
As a reminder, Shell and Exxon Mobil had created a joint venture to explore these offshore concessions off the Somali coast in the early 1990s, shortly before the fall of the Mohamed Siad Barre regime. An unfortunate timing. Since then, the country has experienced nearly three decades of internal strife and unsuccessful foreign military interventions. In fact, a Shell spokesman, quoted by Reuters, insisted that « the payment made was for past charges and that block trades remained suspended ». Another concern for Somali oil ambitions is the dispute between the country and Kenya over the delimitation of their maritime border in a potentially hydrocarbon-rich area. The case was referred to the International Court of Justice, the highest judicial body of the United Nations, in September 2016 and is still awaiting a final resolution.


However, this is not enough to discourage the Somali authorities, who announced in February that 15 blocks covering 75,000 km2 will be auctioned by the end of this year, with the country aiming to extract its first barrels by 2027.