Announcement of IDA Provides Six Million Dollars Credit to Somalia to Promote Petroleum Exploration on June 12, 1980

FOR IMMEOIA TF RELEASE . .;Vorld Bank 1818 H Street, N.W.; Washington, D.C. 20433, U.S.A.• Telephone: (202) 477-1234 I DA NEWS RELEASE NO. 80/97 June 12, 1980 IDA PROVIDES $6 MILLION CREDIT TO SOMALIA TO PROMOTE PETROLEUM EXPLORATION The International Development Association (IDA), the World Bank's affi 1 iate for concessionary lendin~ has approved a $6 million credit to Somalia for a project to help promote petroleum exploration. The Government of Somalia attaches high priority to the development of domestic hydrocarbon resources and wishes to attract foreign companies to undertake petroleum exploration. The project will support the government's efforts to develop a domestic supply of hydrocarbons and improve its planning of the energy sector. Funds wi 11 be provided for exploration and legal consultants who will assist the Department of Mines and Hydrocarbons in the Ministry of Mineral and Water Resources. They wi 11 compile and evaluate geophysical and geological data, and assist in updating the legal • framework and devising a strategy for promoting the country's petroleum potential and negotiating with petroleum companies. A detailed geophysical program will be prepared on the Coriole-Afgoi prospects and a preliminary assessment will be made of oil-shale deposits in the Northern Regions. In addition, training and foreign fellowships will be provided to selected staff ~n the Ministry of Mineral and Water Resources to strengthen the government's capacity in energy planning. Provision is being made for office and field equipment needed to support the work of consultants and to store geological and geophysical data. As a result of this project it is expected that onshore tracts in Somalia will be ready to be offered for exploration by competitive bidding to companies by about mid-1981. The geophysical survey on the Coriole and Afgoi structures will provide conclusive evidence on prospects and the assessment of oil-shale deposits in the Northern Regions will accelerate the development of Somalia's only known hydrocarbon resource. In 1979, Somalia's petroleum imports amounted to $43 mill ion, or nearly 26% cf export earnings, and its future petroleum demand is expe~ted to grow at about 4%-5% per year. The $6 million IDA credit to Somalia is for 50 years, including 10 years of grace. It is interest free but will carry a 3/4 of 1% service charge to cover IDA's administrative costs . • NOTE: Money figures are expressed in U.S. dollar equivalents. FORM NO. 1121 (5-76) T ECHNI CAL D A T A PROJECT: COUNTRY: TOTAL COST: Petroleum Exploration Promotion Soma 1 i a $7. 2 mi 11 ion • IDA FINANCING: $6 million, standard IDA terms OTHER FINANCING: Government of Somalia $1 .2 milliun IMPLEMENTING ORGANIZATION: Ministry of Mineral and Water Resou,~~s Mogadishu, Somalia PROJECT DESCRIPTION: It includes: (a) technical assistance, (56 man-months) for the Department of Mines and Hydrocarbons to compile and evaluate geophysical and geological data and assist it in updating the legal frame- work for promoting Somalia's petroleum potential and negotiating with petroleum compan~; provision is made for staff trainin~office and field equipment, as well as special ~ studies; (b} a geophysical survey of the Coriole-Afgoi prospects; (c) an assessment of the oil-shale deposits in Northern Somalia; and (d) assistance (23 man-months) in energy planning. PROCUREMENT: Contracts for geophysical work will be awarded following international competitive bidding. Vehicles and office and laboratory equipment (estimated at $200,000) will be procured following local bidding procedures which are satisfactory to IDA. CONSULTANTS: A total of 79 man-months of consulting services will be needed: 48 man-months of exploration consultants, 5 man- months of legal consultants, 3 man-months in petroleum accounting; and in energy planning 20 man-months will be required for energy demand, pricing,and efficiency studies, and 3 man-months for a study of institutional, administrative, and manpower requirements . ESTIMATED COMPLETION DATE: 1983 - 0 - •