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The Financial Governance Committee ( #FGC) has issued a damning advisory note concerning the #FGS Ministry of Petroleum and Mineral Resources' (MPMR's) oil & gas licensing efforts.
Current approach provides "poor value for money...that may last for 40 years or more."
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Current approach provides "poor value for money...that may last for 40 years or more."
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The FGC raises concerns over "incomplete compliance with the FGS legal framework, and inadequate protection of FGS’s financial interests." Current MPMR approach risks "future legal and/or compensation claims against FGS."
The FGS makes seven principal recommendations. #7: "PSA negotiations do not prioritise short-term revenue (i.e. signature bonuses) at the expense of longer-term value."
The note confirms that Coastline Exploration ( https://www.coastlineexploration.com/ ) -- a company formed in 2018 and based in the Cayman Islands -- is in fact a rebranding of the discredited Soma Oil & Gas.
"Minimum bidder qualifications are set at relatively low thresholds... By comparison, the 2019 tender protocol required that a bidder include at least one party who has drilled multiple offshore exploration wells."
Grandfathering in "Coastline"?
Grandfathering in "Coastline"?
"...certain provisions seem to allow the award of PSAs even where a single, potentially incomplete or otherwise non-compliant, bid is received."
"The PSA and the tender protocol issued in November 2020 offer considerably more attractive terms to oil companies than previously contemplated."
Per FGC, no stakeholder consultation appears to have occurred. "A group claiming to represent one clan has recently expressed their rejection of petroleum operations in areas inhabited by their clan."
The FGC also recommends that Federal Member States be properly included in the process.
Conclusion: "...there is a significant risk that any contracts awarded under the license round or through direct negotiations will not protect the interests of the FGS and oil-producing FMS or extract appropriate value for #Somalia’s oil over the lifetime of the PSA."
