Hargeisa (Somalia Today) — Two British oil explorers have quit a major license in Somaliland, handing full control to a local partner, a move that underscores the high financial and technical barriers to the breakaway region’s push for oil production.
London-listed Afentra Plc and Genel Energy have transferred their combined interests in the onshore Odewayne block to Petrosoma Limited, a privately owned Somali company.
The deal sees Afentra write off the asset’s entire $21.5 million carrying value, characterizing the block as a “non-core, high-risk frontier” project that no longer fits its strategy.
The exit creates a sharp contrast with the optimism of Somaliland’s government.
Just days earlier, President Abdirahman Mohamed Abdullahi “Irro” promised that drilling for crude oil would begin by 2027, a timeline that now faces the reality of reduced international participation in key acreage.
Financial hit
Under the deal terms, Afentra transferred its 34 percent non-operated interest to Petrosoma, while Genel Energy handed over its 50 percent operating stake.
The transfers received formal approval from Somaliland’s Ministry of Energy & Minerals, leaving Petrosoma—which already held a minority stake—with 100 percent control of the license.
Afentra received no payment from the local firm for the asset transfer. However, the company secured a $1.97 million cash settlement from Genel to resolve outstanding financial obligations related to the block.
“The exit aligns with our strategic focus on acquiring production and development assets in West Africa,” Afentra said in a regulatory statement, effectively closing its books on the venture.
The departure reflects a broader industry trend where mid-cap explorers are shedding “frontier” assets—regions with unproven geology and high political risk—to focus on areas with immediate cash flow.
For Somaliland, this shifts the heavy burden of de-risking the geology onto local players who may lack the deep pockets of London-listed firms.
Focus shifts
For Genel Energy, the withdrawal marks a consolidation rather than a total exit. The company retains its operator status in the separate SL10-B13 block, a tract it considers more prospective and where it has long planned to drill the Toosan-1 exploration well.
However, Genel has faced repeated delays in its drilling campaign, citing the need for further regulatory and security preparations.
In recent updates, the company emphasized it is still working toward the conditions necessary to spud the wildcat well, avoiding firm date commitments.
The exit from Odewayne allows Genel to allocate its limited frontier budget entirely to SL10-B13, raising the stakes for that project.
The corporate retreat comes at a delicate moment for Somaliland’s leadership. Speaking at a mining expo in Hargeisa on Monday, President Irro insisted the territory is on the verge of an energy breakthrough.
“At the latest, oil drilling in Somaliland will begin in 2027,” Irro told investors. “If preparations move faster, it could start in 2026.”
His administration is aggressively courting foreign capital to validate its resource claims.
Irro recently concluded high-level talks in the United Arab Emirates to secure investment in energy and infrastructure, hoping to leverage the UAE’s existing footprint at the strategic Berbera port.
Legal risks
Beyond geology, any oil development in Somaliland faces significant legal hurdles. Somalia’s federal government in Mogadishu maintains it is the only authority legally empowered to issue exploration licenses for the entire country, including Somaliland.
In 2022, Mogadishu explicitly rejected petroleum rights claimed by Genel and other foreign firms, warning that operations conducted without federal consent are illegal.
Somaliland declared independence in 1991 and operates as a de facto state with its own government, currency, and security forces, but lacks international recognition.
This legal limbo complicates financing for large-scale infrastructure, such as export pipelines, which international banks are often hesitant to fund without clear sovereign guarantees.
Analysts say the departure of two London-listed firms from Odewayne suggests a “wait and see” approach from foreign capital.
By handing the block to a local entity, international investors reduce their exposure while the Somaliland government faces increased pressure to prove the region’s commercial viability without the safety net of diversified foreign partners.
