Somalia, rich in hydrocarbons with a favorable geological structure, is open for business afters years of turmoil, the country's Minister of Petroleum and Mineral Resources, Abdirashid Ahmed, said on Friday.
Somalia holds huge opportunities for investors looking to enter the East African market, the minister said at the fourth annual Africa Oil & Power (AOP) conference taking place in Cape Town.
The AOP conference kicked off in Cape Town on Wednesday with the aim of promoting the energy sector to ensure greater economic growth on the continent.
The conference was bringing together Africa's oil, gas and power leaders to facilitate key conversations on the substantial role the energy sector has in empowering other sectors and building thriving and competitive economies.
Somalia sent a high-level delegation to the conference with the hope of attracting foreign investment in the country, particularly in the energy sector.
"Nowhere is the contribution that the energy industry can make to civil society and economic development greater than in Somalia," Ahmed said.
The sector, he said, has the potential to greatly enhance stability and economic development.
Somalia has embarked on its path to transform its petroleum industry and attract the attention of new investors. Significant progress has been made in recent years. Earlier this year, the country passed a new petroleum law which enabled it to make progress in exploration and development, and attract interest from oil and gas majors such as ExxonMobil and Shell.
"My ministry worked successfully with the six federal member states to develop an equitable and transparent framework for development, focused on the greater good of Somalia and all its people, whilst ensuring that we are highly competitive internationally to attract investment by delivering returns that are consistent with the risks and rewards of developing our off-shore industry," said Ahmed.
The country is currently on an international roadshow to showcase the exploration opportunities available in its hydrocarbons sector, said the minister.
Ahmed also spoke of the attractiveness of the country's production sharing agreement (PSA) model for offshore oil exploration and development, describing it as being amongst the most attractive to investors in the frontier basins.
The PSA provides a highly attractive regulatory fiscal framework that is both competitive and equitable for both the people of Somalia and international oil companies (IOC).
"By equitably linking of royalties and share of revenue closely to the price of oil, the Somalia PSA ensures that IOCs can recover their up-front development costs and earn a fair share profit even if oil prices fall, whilst maximizing the profit going to the Somalian people," the minister explained.