The Government of Somalia has approved seven oil production sharing agreements (PSAs) with US-based Coastline Exploration.
The agreement has been ratified by the government after five amendments were made to the original agreement, which was signed in February this year.
As per the PSAs, Coastline has made a payment of $7m to the Somali Central Bank as a signature bonus.
With the PSAs now approved, Coastline can now move ahead with the exploration programme for the offshore deep-water blocks.
The firm will undertake oil and gas exploration on several prospects and leads identified offshore Somalia.
In a statement, Coastline said: “Authorisation was granted following the conclusion of an in-depth review conducted by the FGS into the process followed by Coastline and by the relevant Somali Ministries and related advisory groups, with respect to the signing of the seven PSAs in February of this year.”
The US-based firm estimates each of the discovered fields to produce approximately 100,000 barrels of oil a day and anticipates the discovery of multiple offshore oil fields.
Somalia President Hassan Sheikh Mohamud said: “This agreement highlights that Somalia is open for business and international investment after the conflict that has blighted the country for so many years.
“The federal government will do all it can to support this project and we want the first exploration well to start as soon as possible. Today marks a major step forward for Somalia as we look to develop our energy industry, which should deliver material benefits for all Somalis. Energy independence, new tax revenues, and further foreign investment in Somalia now beckons.”