Mogadishu, Somalia, October 26, 2019 (Saxafi Media) – Royal Dutch Shell and Exxon Mobil have paid $1.7 million to Somalia to lease offshore blocks for 30 years, the country’s state news agency reported on Friday.

“Shell/Exxon Mobil have paid $1.7 million to Somalia as the preliminary rent for 30 years,” SONNA reported.


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Somalia Says Shell, Exxon Agree To Pay $1.7 Million For Oil Blocks Lease
FILE PHOTO: A logo of the Exxon Mobil Corp is seen at the Rio Oil and Gas Expo and Conference in Rio de Janeiro, Brazil September 24, 2018. REUTERS/Sergio Moraes/File Photo

Shell and Exxon Mobil had a joint venture on five offshore blocks in Somalia prior to the toppling of dictator Mohamed Siyad Barre in the early 1990s.

The country has been mired in insecurity since Barre left and is battling Islamist group al Shabaab that frequently carries out bombings in the capital Mogadishu and elsewhere in the country.

Somalia’s Oil Ministry Announcement on June 2019  

In June, the oil ministry announced that the two companies were looking to return to Somalia ahead of an oil block bid round later this year.

The exploration and development of the five offshore blocks were suspended in 1990 under what is known as a “force majeure”, but Shell and Exxon have accrued rentals to the government since then, Shell said in a statement.

Exxon declined to comment and referred inquiries to Shell.

Somalia Says Shell, Exxon Agree To Pay $1.7 Million For Oil Blocks Lease
A passenger plane flies over a Shell logo at a petrol station in west London, in this January 29, 2015 file photo. REUTERS/Toby Melville/Files

The country currently does not produce any oil but production could transform the economy as early-stage seismic data has shown there could be significant oil reserves offshore.

“(An) agreement was signed in Amsterdam on June 21st, 2019 and settles issues relating to surface rentals and other incurred obligations on offshore blocks,” the ministry said.

The force majeure remains in place, regardless of the recent development, Shell added.

The parties have also agreed to hold talks to convert their old contracts in line with a new petroleum bill that was passed earlier this year.

Somalia hopes to allocate 15 offshore blocks with a potential bid date scheduled for November. A roadshow was being organized in Houston, Texas in late September or early October.

Somalia has also passed a revenue-sharing agreement, splitting revenue with oil-producing states but has not yet decided on the share the government will keep in the blocks it awards.

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