Yes, this is extraordinarily bad. And the crazy part is there are articles in the agreement that are significantly worse than this. If you’re a genuine person who cares about the future of our country and the well-being of the people you should advocate for things that actually benefit our people.
First oil well will be operational in the coming monts, HSM says
- Thread starter El Nino
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Damn thats crazy
Hotchick12
VIP
the government has no revenue
Hotchick12
VIP
that’s actually the best time and nationalise later on
You just make stuff up and talk out of your black ass
Any honest person here knows how bad this deal is but you are wasting your time. This has already been vigorously debated here but you are just dealing with strange trolls who are too ignorant to even troll effectively. ‘Damn that’s crazy’ is all he is left with.
You know the penalties if we do that right. Article 8 in the oil agreement goes in depth about it. Turkey will be able to seize our assets in international banks. Intercept money the government makes that’s in foreign banks etc. they can even sell our embassy and other countries. Etc
Yeah, I realized too late. I should’ve stopped from the beginning.
Im a bit skeptical about this interpretation since that doesn't even sound like a legally bindable contract. The idea that turkey could in theory monopolize all 216 blocks seems like something that wouldn't hold up in any court.
Damn thats crazy
We can’t have a sovereign wealth fund if we have literally no infrastructure and most of the country is living in poverty all of the money should go towards modernizing the country
Heads of Ministry’s in Somalia don’t really mean anything the title is given out to people based on political favours most of them are not qualified nor do they have any knowledgeMinistry of Petroleum hasnt even seen it yet
IKHALIIL
WW3 ENJOYER
There’s no PSA in place yet, so I’m not sure what you mean by this. We’ll have to wait for the estimated reserves per block, and only then will the PSAs be negotiated.
You are correct that the Production Sharing Agreements themselves have not yet been negotiated. That is done oil blocked by oil block However, the fiscal terms for every single PSA have already been pre-negotiated in the oil agreement. That means every future PSA will be locked into the fiscal terms laid out in Article 4. This is insane, you will not find this in any other oil contract. We’ve completely given away our leverage.
At the very start of Article 4, it states: “The Parties hereby agree that the Production Sharing Agreement shall be negotiated in a good faith basis and include the provisions reflecting the principles below.”
What this means is that Somalia and Turkey commit to negotiating future oil contracts in good faith, but critically, those PSAs must incorporate the principles outlined in sub-clauses 4.1 through 4.9. In practice, this treaty pre-determines the key fiscal terms of every future PSA. Somalia is bound to ensure that each agreement with Turkey’s entity includes these same one-sided provisions.
If you want, let’s go through the agreement article by article and break it down. Then you’ll see why I’m so passionately against this. We’ve endured a civil war for over 30 years and so many hardships. Inshallah, by the grace of God, we will find oil, and if we manage it properly, it supercharge the recovery our people desperately deserve. That’s why we can’t allow this agreement..
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We can go through the language. In theory, yes, it does give Turkey the ability to monopolize any oil block that hasn’t already been granted to another company. Turkey has first claim rights, and only when they waive those rights can we offer a block to someone else. You’re absolutely right at this agreement goes against Somalia laws. However, we’re bonded by it regardless what makes this agreement ironclad and legally binding are the dispute resolution mechanisms and the change of law provisions in Articles 8, 9, and 10.
We’ve given away incredible concessions. Any dispute will be arbitrated by ICSID in Istanbul, which is outrageous. On top of that, the agreement is illegal under Somali law. We passed the Petroleum Law, which requires every oil agreement to comply with it. That law is an incredibly robust and comprehensive piece of legislation that could serve as the proper framework for managing our resources. Yet this oil agreement openly violates it. Even worse, Article 12.3 includes a supremacy clause stating that if there’s a conflict between the agreement and Somali law, the contract takes precedence . not our domestic law.
If you want, I can walk you through the entire agreement. It gets much worse than Article 4. For example, Article 8 contains a change of law provision. It says that from the moment the agreement was signed, if Somalia enacts any new law or regulation that negatively impacts Turkey’s profits, Somalia is obligated to compensate Turkey out of its own oil share. It’s essentially a regulatory freeze.
Here’s an example: if Somalia introduces environmental regulations that raise Turkey’s costs, we must cover the difference. If Somalia implements a minimum wage that increases labor expenses for Turkey, we are required to compensate them, not in cash, but in barrels of oil.
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Yep, PSA are all that matter, without a PSA in place no block is technically part of any contract area.
And since Contract Area has been defined as follows:
It indeed boils down to PSA that the FGS negotiates for each block within the Contract Area. If FGS doesn't like what Turkey offers, it can just refuse to formalize a PSA for the block in question. Which means Somalia can't sell nor offer that block to anyone for a period 5 years. But beyond that, it's an open market. So if Turkey takes a neocolonial approach, it could lose the pioneer's privilege.
The agreement is open for amendments. Effective for only five years, it can be terminated in 4.5 years; the FGS doesn't like the trajectory Turkey takes. And it can be renewed for periods of 3 years, leaving room for both parties.
All I see is that the FGS gave up major concessions to entice Turkey to always seek win-win deals. There is more for Turkey to gain by building trust and a good reputation as a serious and trustworthy nation. Turkey has much more to lose by being forceful or exploitive. The agreement, without a doubt, gives Turkey privileges not commonly granted in today's climate, but the final verdict is in the hands of the FGS, not Turkey.
The agreement only works if both parties operate in good faith. It is up to Somali institutions to decide what kind of PSA they deem acceptable and, above all, how the revenues will be spent.
Potential disputes
I'm actually worried this agreement will be ruined by the fixed mindset prevalent in the dark continent.
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What makes the agreement legally binding is the sovereign authority confirmation clause. Not those articles.
Istanbul is the location but the court itself will be independent of both Turkey and Somalia.
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This is perfectly normal btw, Turkey also has to contest their F35 case in American courts, thats how it works
Exactly, pretty sure Kuwait and Norway's SWF werent really taken seriously the first decades, they invested in critical infrastructure first, especially norway which was really poor and underdeveloped at that time compared to other scandinavian nations
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