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Oil exploration in Puntland , an autonomous region in northeastern Somalia which is a federal state, began in the mid-2000s as a series of negotiations between the provincial administration and foreign oil companies. By 2012, exploratory wells established in the area yielded the first signs of crude oil.
Somalia has untapped reserves of numerous natural resources, including uranium, iron ore, tin, gypsum, bauxite, copper, salt and natural gas. [1]
The Puntland region in northeastern Somalia, in particular, came to be regarded as the geological analogue of Yemen since both areas once formed a single landmass around 18 million years ago, before the Gulf of Aden rifted and separated the Horn of Africa from the Arabian Peninsula. The oil reserves discovered in Yemen's Cretaceous and Jurassic formations were therefore also thought to potentially exist in Puntland, with petroleum geologists associating the Nugaal and Dharoor blocks with the South Yemen Marib-Shabwa and Sayun-Masila basins, respectively. [2] [3] The cabinet member tasked with overseeing oil exploration in Puntland is Daud Bisinle, Somalia's minister of Petroleum. [4]
In the 2000s, the Puntland government began official negotiations with foreign oil companies over exploration rights in the area. The provincial authorities in October 2005 granted Range Resources a majority stake in two sizable land-based mineral and hydrocarbon exploration licenses, in addition to offshore rights. The onshore Nugaal and Dharoor Valley blocks in question span over 14,424 km2 and 24,908 km2, respectively. Two years later, Range Resources obtained a 100% interest in the two blocks and concurrently farmed out 80% of that share to Canmex Minerals. [3]
At the time of the 2005 agreement officially awarding the licenses to Range Resources, the Puntland government administered the entire Nugaal Valley. However, in 2007, Somaliland recaptured and have since controlled the valley's western section. [3] On account of the uncertain security situation in this part of the Nugaal block, Range Resources have as of 2011 given priority to drilling in the Dharoor Valley. [5]
In January 2007, the Puntland administration, which was then led by President Mohamud Muse Hersi, signed the Puntland Product Sharing Agreement (PSA) with Range Resources Limited and the Canmex Minerals subsidiary Canmex Holdings (Bermuda) II Limited. [2]
Under the terms of the both royalty-based and profit sharing agreement, Canmex would commit to two three-year periods of comprehensive oil exploration in the Nugaal and Dharoor Valley blocks. A 20-year period of exploitation would come into effect in the event of commercial oil yields, with an option to extend the duration an additional 5 years. Gross income would be allocated toward royalty payments, production costs and net profits. The royalty payments for produced crude oil would be deducted first and would be periodically issued to the Puntland government by the oil firms according to the table below.
| Production (barrel oil per day) | Production (m3 oil per day) | Royalty |
|---|---|---|
| 0 to 25,000 | 0 to 4,000 | 4.0% |
| 25,000 to 50,000 | 4,000 to 7,900 | 5.0% |
| 50,000 to 75,000 | 7,900 to 11,900 | 7.0% |
| 75,000 to 100,000 | 11,900 to 15,900 | 9.0% |
| 100,000 and over | 15,900 and over | 10.0% |
After these deductions, up to 70% of gross income would be earmarked for unrecovered capital, operating capital and operating expenses. The remaining gross income would be set aside for profit sharing, with 50% going to the Puntland government and 50% to the oil firms. Any future taxes levied on the petroleum activities would also be paid by the Puntland administration through its share of the oil profits. [2]
Following a change in leadership in 2009, the Puntland government, now led by President Abdirahman Mohamud Farole, sought to renegotiate the profit sharing agreement with Range Resources to ensure more favorable terms for the region. [6]
In 2012, the Puntland government gave the green light to the first official oil exploration project in Puntland and Somalia at large. [7] [8] Led by the Canadian oil company Africa Oil (the former Canmex Minerals [3] ) and its partner Range Resources, initial drilling in the Shabeel-1 well on Puntland's Dharoor Block in March of the year successfully yielded oil. [7]
Somalia is classified by the United Nations as a least developed country, with the majority of its population being dependent on agriculture and livestock for their livelihood. The economy of Somalia is $4.918 billion by gross domestic product as of 2020. For 1994, the CIA estimated it at purchasing power parity to be approximately $3.3 billion. In 2001, it was estimated to be $4.1 billion. By 2009, the CIA estimated that it had grown to $5.731 billion, with a projected real growth rate of 2.6%. In 2014, the International Monetary Fund estimated economic activity to have expanded by 3.7% primarily. This expansion was driven by growth in the primary sector and the secondary sector. According to a 2007 British Chambers of Commerce report, the private sector has experienced growth, particularly in the service sector. Unlike the pre-civil war period, when most services and the industrial sector were government-run, there has been substantial, albeit unmeasured, private investment in commercial activities. The investment has been largely financed by the Somali diaspora, and includes trade and marketing, money transfer services, transportation, communications, fishery equipment, airlines, telecommunications, education, health, construction and hotels.
Puntland, officially the Puntland State of Somalia, is a Federal Member State in northeastern Somalia. The capital city is the city of Garoowe in the Nugal region, and its leaders declared the territory an autonomous state in 1998. Puntland had a population of 4,334,633 in 2016. Geographically to the west, Puntland lays claim to the intra-46th meridian territories that were outside European colonial rule during parts of the Scramble for Africa period.
Hydrocarbon exploration is the search by petroleum geologists and geophysicists for deposits of hydrocarbons, particularly petroleum and natural gas, in the Earth's crust using petroleum geology.
A royalty trust is a type of corporation, mostly in the United States or Canada, usually involved in oil and gas production or mining. However, unlike most corporations, its profits are not taxed at the corporate level provided a certain high percentage of profits are distributed to shareholders as dividends. The dividends are then taxed as personal income. This system, similar to real estate investment trusts, effectively avoids the double taxation of corporate income.
Garowe is the capital city of Puntland located in northeastern Somalia. It serves as the administrative center of the Nugal region and is known for its strategic importance. The city has experienced growth and development, hosting government institutions and providing essential services to its residents. Garowe is situated in a territory with a semi-arid climate, and its economy is influenced by trade, livestock, and agriculture.
The Majeerteen is a prominent Somali sub-clan of the Harti, which falls under the Darod clan. Traditionally, they inhabit extensive territories in the Bari, Nugaal, and Mudug regions of Somalia, spanning from Bosaso to Garacad, mainly in Puntland state. Additionally, Majeerteen populations are present in southern towns such as Kismayo.
The
of Somalia produces small quantities of gemstones and salt. The country also has deposits of feldspar, gypsum, iron ore, copper, gold, kaolin, limestone, natural gas, quartz, silica sand, tantalum, tin, and uranium. The mineral industry makes a small contribution to Somalia’s exports and economy in general.
The mineral industry of São Tomé and Príncipe does not play a significant role in the country's economy.
Abdirahman Mohamed Mohamoud Farole is a Somali politician. He served for many years in the government, acting as a governor of the Nugal region of Somalia in the 1990s and later as the Minister of Finance of the autonomous Puntland region in the northeast. From 8 January 2009 to 8 January 2014, Farole was also the President of Puntland. Farole's multipronged efforts at creating provisions and collaboration with international polities and organizations resulted in a drastic decrease in piracy along the Marinka Gardafuul.
Abdisamad Ali Shire was a Somali politician and military officer who served as the Vice President of Puntland fom January 8, 2009, to January 8, 2014.
Abdiweli Mohamed Ali Gaas, also more known as Abdiweli Gaas, is a Somali American economist and politician. He served as the Prime Minister of Somalia from June 2011 to October 2012, and briefly afterwards as an MP in the newly formed Federal Parliament. During his time as premier, Ali is credited with having devised the formal "Roadmap for the End of Transition", a political process that provided clear benchmarks leading toward the establishment of permanent democratic institutions in the country. On 8 January 2014, he was elected the 5th President of the Puntland.
The Nugaal Valley, also called the Nogal Valley, is a long and broad valley located in northern Somalia.The Nugaal Valley is bounded to the north by the warsangali clan or Nugal valley area and to the south by 'Iid.
The petroleum fiscal regime of a country is a set of laws, regulations and agreements which governs the economical benefits derived from petroleum exploration and production. The regime regulates transactions between the political entity and the legal entities involved. A commercial or legal entity in this context is commonly an oil company, and two or more companies may establish partnerships to share economic risks and investment capital.
The Government of Puntland is the supreme governing authority of the autonomous region of Puntland State of Somalia. The legal structure of Puntland consists of the judiciary, legislative and the executive branches of government. Puntland has conducted four presidential elections. Presidents are elected by a 66-member unicameral parliament. Since 1998, the governing bodies have been located in the regional capital of Garowe.
The Dharoor Valley is valley located in the Bari province of the autonomous Puntland region in northeastern Somalia. It possesses relatively abundant grazing terrain for pastoralism, similar to the Noobir. Along with the Nugaal Valley, the Dharoor Valley has been a center for oil exploration in Puntland.
Dr. Abdirizak Omar Mohamed is a Somali politician. He was Minister of Natural Resources in Abdi Farah Shirdon cabinet from November 8, 2012, till the cabinet was ousted on December 2, 2013, and then moved on to become the Senior Policy Advisor to the President of Somalia Hassan Sheikh Mohamud. He was the Minister of Internal Security of Somalia. Currently he is the Minister of Petroleum and Mineral Resources for the Federal Government of Somalia, and hold this post since 12 August 2022. He is the former Minister of Internal Security of Somalia, having been appointed to the position on 6 February 2015 by the former Prime Minister Omar Abdirashid Ali Sharmarke.
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The mining industry of Yemen is at present dominated by fossil mineral of petroleum and liquefied natural gas (LNG), and to a limited extent by extraction of dimension stone, gypsum, and refined petroleum. Reserves of metals like cobalt, copper, gold, iron ore, nickel, niobium, platinum-group metals, silver, tantalum, and zinc are awaiting exploration. Industrial minerals with identified reserves include black sands with ilmenite, monazite, rutile, and zirconium, celestine, clays, dimension stone, dolomite, feldspar, fluorite, gypsum, limestone, magnesite, perlite, pure limestone, quartz, salt, sandstone, scoria, talc, and zeolites; some of these are under exploitation.
The Ministry of Energy and Minerals is one of the governmental bodies of Somaliland. The ministry has the function of developing and implementing policies related to electricity, minerals, petroleum and petroleum products, the current minister is Abdillahi Farah Abdi.
Puntland, ,, officially the Puntland State of Somalia, Arabic: ولاية أرض البنط الصومالية), is a Federal Member State in northeastern Somalia. The Administrative Capital is Garowe in the Nugal region, and its leaders declared the territory an autonomous state in 1998. Geographically to the west, Puntland lays claim to the intra-46th meridian territories that were outside European colonial rule during parts of the Scramble for Africa period.