Somalia signs $7mn oil exploration deal with US company

Somalia's government has recently signed an oil production sharing agreement with US-based Coastline Exploration Ltd, marking a significant step towards developing the country's energy industry. Stig Jarle Hansen, an expert on Somalia, shed light on this deal and the economic costs of instability in the region. The agreement involves a $7 million investment from the US company to explore seven blocks of oil in Somali waters. While this partnership signals a positive development, there remain challenges that need to be carefully navigated. The maritime security environment, historically plagued by piracy, has shown improvement over the past decade, making exploration operations safer. However, there are concerns about the internal grounding within Somalia, as there is a history of political elites exploiting such deals. The depth of this agreement and its alignment with Somali parliamentary support will be crucial for its success. The transition to a new administration has brought about a change in approach, with the current government seeking to establish its own network of partners and strategies in contrast to its predecessor. The decision to move forward with oil exploration comes after years of delays due to security risks, legal ambiguities, and political instability. The Somali government's passage of a petroleum sector act in 2019 aimed at regulating the industry and attracting investment. While this legislation provides a framework for exploration, the country's complex political landscape and security concerns continue to pose challenges for potential investors. The recent twin bombings in Mogadishu highlight the persistent security threats in Somalia, raising questions about the government's ability to maintain peace and stability. Despite these challenges, there have been notable improvements in maritime security, with piracy incidents significantly declining. The government's offensive against onshore threats like Al-Shabaab shows promise, although the reliance on clan-based militias presents its own set of risks. Strengthening the Somali police and judicial systems will be pivotal in sustaining this momentum and ensuring a successful outcome. As Somalia embarks on this new chapter in oil exploration, balancing economic opportunities with security considerations will be essential for the country's progress and stability.