By Mohamed Ali Mirreh

Somalia, a nation long synonymous with instability and ineffective governance still faces a long road toward the transformative changes needed to lift its people out of poverty. Paradoxically, despite its many struggles, the country is believed to have vast untapped reserves of oil, gas, and minerals.

Recent geological surveys and exploration efforts have sparked hope that significant wealth lies beneath Somalia’s land and waters. Many Somalis see these resources as a potential gateway to prosperity and development. But how realistic are these hopes? And what challenges must be overcome to turn this potential into reality?

 Assessing the Potential of Somalia’s Oil and Gas Reserves

Recent seismic surveys and exploratory drilling suggest that Somalia’s offshore regions—especially Puntland and the waters along the Indian Ocean—may harbour substantial oil and gas deposits. Early reports indicate the potential for billions of barrels of oil, which, if fully confirmed, could elevate Somalia to the ranks of Africa’s largest oil producers.

Somalia’s geographical location and favourable geological features have led some experts to draw comparisons with neighbouring oil-rich nations like Yemen and Gulf States. Unsurprisingly, this potential has attracted the interest of international oil companies, several of which have already signed agreements for exploration rights.

 Is Somalia Really a Future Oil Giant?

While the potential is enticing, it’s crucial to remember that these reserves are still speculative. Most of the current data comes from preliminary studies, and Somalia remains in the early stages of exploration thus declaring the country a future oil giant is premature.

In addition to hydrocarbons, Somalia is believed to have significant mineral deposits, including uranium, iron ore, and possibly rare earth minerals. However, like its oil and gas resources, these minerals remain largely untapped, the result of decades of political instability, conflict, and a lack of infrastructure.

 High Hopes for Wealth: A Cautious Optimism

The possibility of oil and gas reserves has given rise to high hopes among Somalis that their country could be on the brink of an economic renaissance. Many believe that exploiting these resources could lift millions out of poverty, create jobs, and finance much-needed infrastructure.

However, such optimism must be tempered with caution. The experience of many African nations demonstrates that the discovery of natural resources does not automatically lead to widespread prosperity. Without proper governance and oversight, resource wealth can fuel further the already prevalent corruption, conflict, and inequality—a phenomenon known as the “resource curse.” 

There are concerns that some of the agreements signed between Somali officials and even with newly-formed oil companies may not prioritize the long-term welfare of the country, raising the spectre of dubious deals that benefit a few while side-lining the population.

Challenges on the Path to Prosperity

Unlocking Somalia’s potential oil wealth will require overcoming significant hurdles. Political stability is paramount. Ongoing conflict and weak governance make it difficult to attract large-scale investment and develop the necessary infrastructure safely.

Moreover, Somalia’s legal framework for oil and gas exploration is practically non-existent or still underdeveloped. Somalis need a government that represents all federal states and has the trust of the Somali people as well as capable of  creating transparent, enforceable contracts and production-sharing agreements that strike a fair balance between attracting foreign investors and ensuring that the Somali people benefit from their country’s resources.

 The Long Road to Production

Even if Somalia’s oil potential is confirmed, large-scale production is a long way off. It could take anywhere from 25 to 30 years before the country can fully commercialize its oil and gas reserves. Developing the necessary infrastructure—pipelines, refineries, ports—will require vast investment, time, and stable governance.

This lengthy timeline presents uncertainties. With the rapid pace of technological change and a global shift toward renewable energy, there’s a risk that by the time Somalia is ready to export oil, demand for fossil fuels could be significantly lower than it is today.

 A Shrinking Global Market for Oil

The global energy landscape is undergoing a profound transformation as nations strive to reduce their carbon footprints and combat climate change. As a result, the demand for oil is expected to decline significantly. The large-scale production of electric vehicles (EVs) by countries like China is playing a crucial role in this shift, reducing reliance on traditional internal combustion engine (ICE) vehicles that run on gasoline and diesel. Additionally, the rise of smart power grids connected to renewable energy sources such as solar and wind farms is gradually phasing out industries powered by conventional oil and gas-fuelled power stations.

Currently, the International Energy Agency (IEA) reports that approximately 80% to 82% of the world’s energy consumption comes from fossil fuels, while around 12% to 13% is derived from renewables—including hydropower, solar, wind, geothermal, and bioenergy. However, this balance is rapidly changing, with renewable energy projected to dominate global energy consumption in the coming decades. In fact, the transition may happen faster than previously anticipated, as major oil companies are already shifting their investments toward renewable energy sources.

For countries like Somalia, this shift could have significant implications. Even if Somalia becomes a major oil producer, it may find itself in a global market where oil prices are lower, and competition is far more intense than expected. As the world moves toward cleaner energy alternatives, the value of fossil fuel resources could diminish, challenging oil-dependent economies to rethink their development strategies.

Conclusion: Balancing Hope with Realism

Somalia’s oil and gas potential may be promising, but the country must temper its expectations. Resource wealth alone will not solve its challenges or guarantee lasting prosperity. As Somalis, we must shift our mind-set and focus on building strong institutions, fostering a stable political environment, and establishing a transparent legal framework for managing resources.

Moreover, we must recognize that beyond oil and gas, Somalia has untapped opportunities in sectors like agriculture, fisheries, and livestock—industries that could provide more immediate and sustainable sources of economic growth. By prioritizing good governance and investing in a diversified economy, Somalia can develop a resilient economic foundation, less dependent on the unpredictable nature of global energy markets.

Ultimately, it is sound governance, not just oil and gas that will determine whether Somalia can transform its natural resources into long-term prosperity for its people.

By Mohamed Ali Mirreh
Email: m.mmirreh@gmail.com

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Mr. Mireh is an electrical engineer with extensive international experience in high-voltage (HV) networks and renewable energy, he is also a seasoned wardheerNews contributor.

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