Turkey has made a significant move in the energy sector by securing rights to 90% of Somalia’s oil and gas output through a landmark agreement.
This deal, which lays the foundation for long-term energy cooperation, was signed in Istanbul and is seen as a strategic partnership between the two nations.
Key Takeaways
- Turkey gains 90% rights to oil and gas output from Somalia.
- The agreement includes favorable terms for Turkish companies, including exemptions from typical financial obligations.
- Somalia retains only 10% of the output, raising concerns about resource sovereignty.
- The deal is part of Turkey’s broader strategy to enhance its influence in Africa.
Overview of the Agreement
The agreement, titled “Agreement Between the Government of the Republic of Turkey and the Federal Government of the Federal Republic of Somalia in the Field of Hydrocarbons,” was signed on March 7, 2024, by Turkey’s Energy Minister Alparslan Bayraktar and Somalia’s Petroleum Minister Abdirizak Omar Mohamed. It was made public as part of Turkish parliamentary proceedings on April 22, 2024.
This deal is a key component of Turkey’s Africa Opening Strategy, which aims to position Somalia as a vital partner due to its strategic maritime location and untapped energy reserves.
Somalia is estimated to have six billion cubic meters of proven natural gas and up to 30 billion barrels of offshore hydrocarbon potential.
Financial Terms and Conditions
The agreement grants Turkey extensive operational and financial privileges, including:
- 90% Output Rights: Turkey will receive 90% of the oil and gas produced, while Somalia will only receive 10%.
- No Upfront Costs: Turkish entities are exempt from paying signature, development, or production bonuses, as well as surface and administrative fees.
- Cost Recovery: Turkish companies can recoup up to 90% of the annual output as “cost petroleum” before profit-sharing.
- Royalty Cap: Somalia’s share is limited by a five percent royalty cap, which does not apply to reinjected or operationally used petroleum.
- Export Freedom: Turkish firms can export their share at international prices without restrictions.
Legal and Security Provisions
The agreement includes several legal and security assurances for Turkish investments:
- International Arbitration: Disputes will be subject to international arbitration under the ICSID Convention, with Istanbul as the venue.
- Security Measures: Turkey can implement its own security measures in Somalia, with related expenses counted as recoverable costs.
- Military Deployment: A presidential decree accompanying the agreement seeks approval for deploying Turkish military personnel to Somalia for counterterrorism and anti-piracy operations.
Implications and Reactions
While Turkish officials celebrate the deal as a diplomatic and economic victory, it has also drawn criticism.
Opposition lawmaker Yankı Bağcıoğlu raised concerns about the cost-effectiveness of deploying Turkish vessels to Somalia and the potential diplomatic complications with Ethiopia.
The agreement is set to remain valid for five years, with automatic three-year renewals unless terminated by either party. It overrides conflicting national legislation, establishing Turkey as a primary driver of resource extraction and development in Somalia.
As Turkey prepares to begin exploration in Somali waters in late 2025, the implications of this deal will likely resonate throughout the region, influencing both energy dynamics and geopolitical relations.
