Could Somalia See The World's Next Major Oil Discovery?

1 month ago 10

Natalia Katona

Thu, July 16, 2026 astatine 10:00 AM CDT 7 min read

As the Gulf (the world's accepted vigor centre) becomes riskier, the lipid manufacture is searching for caller hydrocarbon provinces. Much high-impact exploration is concentrated successful Latin America and West Africa, acold from Asia-Pacific, the main oil-demand maturation centre. Somalia offers a antithetic proposition: 1 of the industry's hottest frontier wells is being drilled crossed the Arabian Sea and, if successful, could nutrient barrels that needn't walk done the Strait of Hormuz.

The Curad-1 exploration good was appraised aft TPAO's Oruc Reis vas collected 4,464 km2 of 3D seismic information crossed offshore Blocks 142, 152, and 153 betwixt October 2024 and June 2025. Early results from Blocks 152 and 153 were encouraging, pointing to immense lipid reserves, and TPAO started spudding the good successful Block 153 successful April 2026 utilizing its ain drillship. Located astir 372 kilometres northeast of Mogadishu successful astir 3,500 metres of water, Curad-1 is expected to scope a full extent of astir 7,500 metres. Drilling could instrumentality up to 288 days and volition marque it 1 of the deepest offshore exploration wells ever attempted.

Somalia's offshore remains mostly unexplored: lone 8 wells person been drilled historically, including conscionable 2 successful the Somali Basin, and nary person produced a commercialized find truthful far. Hence, the hazard is reflected successful the country's precocious revamped fiscal terms. Under Somalia's 2020 exemplary PSA, companies whitethorn retrieve up to 70% of lipid and 80% of state accumulation arsenic outgo petroleum, portion the government's stock of profits rises arsenic task returns improve. Somalia's revised 2023 PSA exemplary has replaced its wide sliding royalty strategy with a level complaint of 5% for some lipid and gas. To springiness a perspective, internationally a 5% royalty remains comparatively generous to investors, but it is nary longer exceptional for frontier offshore acreage. It is broadly comparable with smaller West African deepwater contracts and good supra the 2% royalty granted nether Guyana's archetypal Stabroek agreement. However, it remains lone fractional the 10% royalty Guyana introduced for caller licences aft its basin had been de-risked by a succession of large discoveries. Guyana's progression illustrates the logic down Somalia's positioning: low-to-moderate royalties tin beryllium justified portion geological and information risks stay extreme.

Somalia has attracted explorers since the 1950s, and by the precocious 1980s, companies including Conoco, Chevron, Eni, Shell, and ExxonMobil held concessions covering astir fractional of the country. Exploration stopped erstwhile the authorities collapsed successful 1991 owed to a civilian war, but galore companies declared unit majeure alternatively than formally relinquishing their acreage, leaving bequest rights legally dormant for decades. Shell and ExxonMobil aboriginal reached a roadmap statement with the national authorities covering their aged offshore interests, portion newer licenses were awarded to companies specified arsenic Coastline Exploration and to operators moving done the authorities successful semi-autonomous regions of Puntland and Somaliland. This created overlapping and contested claims, arsenic Mogadishu has rejected immoderate licenses granted independently by determination administrations, including those claimed by Genel Energy successful Somaliland. Somalia's exploration occupation has truthful been not lone disappointing wells and insecurity, but besides a fragmented licensing representation successful which aged concessions, caller national awards and determination permits person sometimes competed for the aforesaid acreage.

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