Somalia: 'Illegal' oil deal with US company rejected

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Somalia's President and Prime Minister have declared null and void a deal signed by the Somali Energy Minister with a US company to explore for oil and gas off the coast of the troubled Horn of Africa nation.

Minister of Petroleum and Mineral Resources Abdirashid Mohamed Ahmed and Coastline Exploration Ltd had announced on Saturday seven production sharing agreements (PSAs) covering deepwater offshore blocks.

Ahmed hailed it as a "huge moment" for Somalia, one of the poorest countries in the world.

"Recently completed seismic programs indicate that Somalia has the potential to become a significant oil and gas producing country," he said in a statement.  

The PSAs "will have an immediate positive effect on the country", he said, and are expected to generate tens of millions of dollars for federal and state coffers.

But both Somalia's President and Prime Minister swiftly denounced the deal late Saturday.

The office of President Mohamed Abdullahi Mohamed said it violated a decree that bans signing any agreements with foreign governments or entities during the election period.

"Therefore the agreement which the minister signed is null and void," it said in a statement.

Prime Minister Mohamed Hussein Roble also dismissed the agreement as "illegal, unacceptable" in a post on Twitter, saying he would "take all appropriate measures to protect our national resources.”

On its part, the US Company Coastline, which is based in Houston, Texas, had hailed the deal as a "defining moment" for Somalia, which has so far not produced oil or gas although exploration started in the 1950s before being derailed by the civil war.

"Somalia contains the largest remaining unexplored set of basins situated in warm waters in the world," Coastline chief executive W. Richard Anderson said in a statement.

There was no immediate response from Coastline to requests for comment about the Somali leaders' reaction to the deal.

Somalia is plodding through an election process that is more than a year overdue and has been marred by violence, including a series of attacks across Somalia.

Somali leaders had announced reaching an agreement to complete parliamentary elections by February 25 following repeated delays that put stability on the line in the already troubled country.

The leaders struck the deal following several-day-long talks, which Prime Minister Mohamed Hussein Roble hosted with state leaders. The talks were held with the intention of ending an impasse over the elections after they had been delayed several times before.