First oil well will be operational in the coming monts, HSM says

[Supasta]

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.

What you’re not understanding is that the federal government of Somalia accepted preset fiscal terms that must be included in every production sharing agreement. We know this because Article 4 begins with: “The Parties hereby agree that the Production Sharing Agreement shall be negotiated in good faith and include the provisions reflecting the principles below”

This means that all the terms already established in the oil agreement must be included in any production sharing agreement. When you combine that with the fact that Somalia is obligated to sign a production sharing agreement with Turkey for whichever area they deem appropriate, you can begin to see why this is problematic.

As for simply refusing to formalize a production sharing agreement, Somalia cannot do that. The grant of rights does not give Somalia discretion; if it did, the word “shall” would not have been used. The word “may” would have been.

The agreement can only be amended through mutual consent, not unilaterally. Somalia cannot amend it on its own, and there is no reason to believe Turkey would agree to any amendment.

Yes, the agreement is for five years and renews automatically every three years unless one party objects during the last six months of the term. However, even if it is terminated, any ongoing oil blocks that have already been drilled are not affected and will continue under the terms already set. Furthermore, if Turkey begins drilling and the agreement is terminated before Turkey recovers its costs, they could argue that Somalia violated the treaty under the change of law provisions.
Somalia has already accepted the terms that will govern the production sharing agreements because most of the fiscal terms have been preset in the oil agreement. In doing so, Somalia did not just give up major concessions, it gave up leverage.

 

[Supasta]

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.

Again, you haven’t really understood their agreement. It states quite clearly in Article 12.3: “Where this Agreement establishes rules other than those provided by the national legislation of the Parties’ states, the rules established by this Agreement shall apply.”

This is a supremacy clause. Whenever there is a conflict between Somali national law and the conditions of the oil agreement, the terms of the agreement will prevail. This represents a serious erosion of Somalia’s sovereignty and jurisdiction.

Once again, you seem to misunderstand the two formats under which Turkey can settle disputes with Somalia, or what they perceive to be violations. One is ICSID, and the other is UNCITRAL.

Under ICSID, the core principle is neutrality. Arbitration is usually held in a neutral third country to avoid any appearance of procedural or political imbalance. However, there is not necessarily a problem with an ICSID arbitration being held in Istanbul.

Under UNCITRAL, however, the seat of arbitration determines procedural law and local court oversight. The arbitration will be governed by Turkish arbitration law for procedural matters, and Turkish courts will have supervisory jurisdiction for issues such as tribunal appointment, challenges, or annulment proceedings. One of the most significant powers those courts have is the ability to set aside an award or ruling from the arbitration.

For example, if a decision were made in Somalia’s favor, a Turkish court could set it aside, effectively overturning the outcome of the arbitration. I hope you are beginning to understand why this is extremely problematic.

 

[Barkhadle1520]

What you’re not understanding is that the federal government of Somalia accepted preset fiscal terms that must be included in every production sharing agreement. We know this because Article 4 begins with: “The Parties hereby agree that the Production Sharing Agreement shall be negotiated in good faith and include the provisions reflecting the principles below”

This means that all the terms already established in the oil agreement must be included in any production sharing agreement. When you combine that with the fact that Somalia is obligated to sign a production sharing agreement with Turkey for whichever area they deem appropriate, you can begin to see why this is problematic.

As for simply refusing to formalize a production sharing agreement, Somalia cannot do that. The grant of rights does not give Somalia discretion; if it did, the word “shall” would not have been used. The word “may” would have been.

The agreement can only be amended through mutual consent, not unilaterally. Somalia cannot amend it on its own, and there is no reason to believe Turkey would agree to any amendment.

Yes, the agreement is for five years and renews automatically every three years unless one party objects during the last six months of the term. However, even if it is terminated, any ongoing oil blocks that have already been drilled are not affected and will continue under the terms already set. Furthermore, if Turkey begins drilling and the agreement is terminated before Turkey recovers its costs, they could argue that Somalia violated the treaty under the change of law provisions.
Somalia has already accepted the terms that will govern the production sharing agreements because most of the fiscal terms have been preset in the oil agreement. In doing so, Somalia did not just give up major concessions, it gave up leverage.

I dont know why were all arguing about this rn, theres no evidence anything will happen in 2026 anyways

2 years might pass with no news you never know with fgs

 

[Supasta]

I dont know why were all arguing about this rn, theres no evidence anything will happen in 2026 anyways

2 years might pass with no news you never know with fgs

I’m speaking about this because the terms of the deal are fundamentally exploitative. It doesn’t matter when oil will be extracted, for whenever it does, Turkey gets to extract it under this lopsided agreement. That’s the issue.

 

[Barkhadle1520]

I’m speaking about this because the terms of the deal are fundamentally exploitative. It doesn’t matter when oil will be extracted, for whenever it does, Turkey gets to extract it under this lopsided agreement. That’s the issue.

Lets agree to disagree on that

What do you think about when it will be extracted, since you say you know so much about this topic whats the infrastructure needed

 

[Supasta]

Lets agree to disagree on that

What do you think about when it will be extracted, since you say you know so much about this topic whats the infrastructure needed

Let’s disagree on the facts? What exactly do you disagree on?