Somalia Upstream Fiscal and Regulatory Guide

Region:Africa

Author(s):

Product Code:GDGE0164UFR

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Published on

November 2019

Total pages

25

Table of Content

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About the Report

About the Report

Somalia Upstream Fiscal and Regulatory Guide

Summary

Somalia offers production sharing agreements for upstream petroleum operations. Following years of instability the government has launched its First Offshore Licensing Round, which will continue into 2020. New legislation to accompany the round is awaiting enactment by parliament. If enacted, the new legislation would implement a royalty of between 5-35% and a profitability-based profit sharing mechanism. Additional legislative uncertainty remains whilst updates to the constitution are pending. Contracts signed before 1991 would be required to be renegotiated under the new terms. Any successful renegotiations are likely set the tone for future investment in the area.

Somalia Upstream Fiscal and Regulatory Guide, presents the essential information relating to the terms which govern investment into Somalia's upstream oil and gas sector. The report sets out in detail the contractual framework under which firms must operate in the industry, clearly defining factors affecting profitability and quantifying the state's take from hydrocarbon production. Considering political, economic and industry specific variables, the report also analyses future trends for Somalia's upstream oil and gas investment climate.

Scope

- Overview of current fiscal terms governing upstream oil and gas operations in Somalia

- Assessment of the current fiscal regime's state take and attractiveness to investors

- Charts illustrating the regime structure, and legal and institutional frameworks

- Detail on legal framework and governing bodies administering the industry

- Levels of upfront payments and taxation applicable to oil and gas production

- Information on application of fiscal and regulatory terms to specific licenses

- Outlook on future of fiscal and regulatory terms in Somalia

Reasons to buy

- Understand the complex regulations and contractual requirements applicable to Somalia's upstream oil and gas sector

- Evaluate factors determining profit levels in the industry

- Identify potential regulatory issues facing investors in the country's upstream sector

- Utilize considered insight on future trends to inform decision-making

Products

Table of Contents

Table of Contents

Table of Contents

1.1. List of Tables

1.2. List of Figures

2. Executive Summary

2.1. Regime Overview - Production Sharing Agreement

2.2. Timeline

2.3. State Take Assessment

3. Key Terms - Production Sharing Agreements

3.1. Royalties, Bonuses and Fees

3.1.1. Signature Bonus

3.1.2. Additional Bonus

3.1.3. Surface Fees

3.1.4. Local Communities Fund

3.1.5. Training Fee

3.1.6. Administrative Fees

3.1.7. Royalties

3.2. Cost Recovery

3.2.1. Limit on Recovery

3.2.2. Recoverable Costs

3.2.3. Non-Recoverable Costs

3.3. Profit Sharing

3.4. Direct Taxation

3.4.1. Corporate Income Tax

3.4.2. Capital Gains Tax

3.4.3. Withholding Tax

3.5. Indirect Taxation

3.5.1. Value Added Tax

3.5.2. Customs Duties

3.6. State Participation

3.7. Natural Gas Discoveries

3.8. Domestic Market Obligation

3.9. Fiscal Stability

3.10. License Terms

3.10.1. Duration and Relinquishments

3.10.2. Work Obligation

3.10.3. Decommissioning Fund

4. Regulation and Licensing

4.1. Legal Framework

4.1.1. Governing Law

4.1.2. Contract Type

4.1.3. Title to Hydrocarbons

4.2. Institutional Framework

4.2.1. Licensing Authority

4.2.2. Regulatory Agency

4.2.3. National Oil Company

4.3. Licensing Process

4.3.1. Licensing Rounds

4.3.2. Bidding

4.4. Local Content

5. Appendix

5.1. References

5.2. Contact Us

5.3. Disclaimer


List of Figure

List of Figures

Figure 1: Regime Flow Chart - Production Sharing Agreements

Figure 2: Somalia, Indicative NPV10/boe, IRR and State Take Comparison, and Price and Cost Sensitivity Analysis

Figure 3: Somalia, Legal Framework

Figure 4: Somalia, Institutional Framework


List of Table

List of Tables

Table 1: Regime Overview

Table 2: Somalia, Key Events since 2000

Table 3: Somalia, PSA, Administrative Fees, 2019

Table 4: Somalia, PSA, Average Daily Oil and Condensate Production Volume Thresholds and Corresponding Royalty Rate Contribution (V), 2019

Table 5: Somalia, PSA, Average Oil Price Thresholds and Corresponding Royalty Rate Contribution (P), 2019

Table 6: Somalia, PSA, Average Daily Gas Production Volume Thresholds and Corresponding Royalty Rate Contribution (V), 2019

Table 7: Somalia, PSA, Average Gas Price Thresholds and Corresponding Royalty Rate Contribution (P), 2019

Table 8: Somalia, PSA, R-Factor Profit Oil and Profit Gas Split, 2019

Table 9: References

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