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Somalia Finalizes Its Controversial $7m Oil-production-sharing Deal With US Firm, Coastline Exploration

Somalia has finalized its $7m (£6.2m) oil production sharing agreement with US company, Coastline Exploration.

Coastline Exploration is an upstream oil and gas company focused on East Africa. The company announced on Friday that it had paid the government a $7 million underwriting bonus and will now proceed with exploration.

The deal was approved after months of changes to the original deal. In February 2022, announced by the former Somali president and prime minister, the Somali government denied signing such a treaty and declared it illegal.

According to the BBC, the agreement was considered illegal due to the country’s law that suspends such agreements during the election period.


The BBC report says; “At the time, Villa Somalia, the presidential palace in Mogadishu, declared the agreement null and void, invoking a presidential decree that prohibited government agencies from entering into international treaties during the election period.”

Abdirashid Mohamed Ahmed, Somali Minister of Petroleum and Natural Resources, and Richard Anderson, CEO of Coastline Exploration Ltd., signed the agreement.

However, in separate statements, Somali President Mohamed Abdullahi Mohamed, known as Farmaajo, and Prime Minister Mohamed Hussein Roble rejected the deal, declaring it “null and void”.

Also, read; Uganda Court Sentence Man Caught With Elephant Ivory To Life In Prison

Coastline Exploration’s CEO at the time emphasized that he believed the deal was legal based on the assurances he received from Somali’s oil minister.

He stated that he did not communicate directly with the President or the Prime Minister, but the Minister of Petroleum and SPA members assured his organization that both leaders were aware.

Somalia Finalizes Its Controversial $7m Oil-production-sharing Deal With US Firm, Coastline Exploration

At the time, Mohamed Abdullahi Mohamed was residing as president of the country, but he lost to Hassan Sheikh Mohamud.

However, a statement released by Coastline Exploration says that Somalia, under its current government, has just signed the oil exploration agreement for seven offshore blocks with US-based Coastline Exploration.

In 2019, Somalia passed an oil sector law, paving the way for exploration, particularly on the coast.

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