Opinion | Somaliland’s Buried Fortune: Geology, Politics and Strategic Ambitions

By: Mukhtar Mahdi 

My analysis of Somaliland’s oil story, after following it closely, is that oil drilling is a net positive opportunity that the government should pursue but only as a carefully sequenced, long-horizon national project, not as a shortcut to quick revenue. The case rests on evidence already sitting in the public record. Internationally, Genel Energy’s Toosan-1 prospect is built on real science rather than speculation: it sits on 2017–2018 seismic data, is geologically comparable to Yemen’s productive rift basins, and carries an estimated 650 million barrels of prospective resources, a scale few frontiers play in the region can match. Locally, DP World’s transformation of Berbera port shows that Somaliland can absorb large, technically demanding investment and turn it into functioning revenue generating infrastructure which is exactly the institutional muscle that oil production will demand.

Genel Energy’s interests in Somaliland extend beyond SL10B/13, with a 50% stake in the Oodweyne license (SL6, SL7A, and SL10A), alongside Afentra (34%) and Petrosoma (16%). Seismic surveys and basin studies have identified potential drilling opportunities. Further east, RAK Gas operates Blocks SL9 and SL12, holding a 75% interest alongside IECC (25%). Oil money moves faster than institutions do. A revenue-management law takes years to draft and pass. A production-sharing agreement can be signed in months. If Somaliland lets drilling outrun legislation, the money arrives first, and it arrives at the only channels that already exist: the ministries and agencies controlling the license at that moment. That’s where Somaliland’s specific vulnerability shows up. This isn’t a generic resource-curse warning. Somaliland’s exploration blocks cut across contested administrative lines and a clan-balance system that has been held together for three decades through careful, continuous negotiation, not through formal institutions strong enough to absorb a shock this size. Oil revenue arriving without a binding sharing formula doesn’t sit neutrally on top of that balance. It gets read by every region and clan as a signal of who the state favors. Regions near the blocks that see jobs and infrastructure will be resented by regions that don’t. Regions that see nothing will conclude, correctly, that the settlement excluded them. 

The consequence isn’t hypothetical instability years out. It’s immediate and specific: the same recognition campaign Somaliland is running on Berbera, rare minerals, and basing rights depends on the government presenting a unified, credible negotiating position. A government visibly fighting over oil rents at home is a much weaker partner for investors and superpowers like Washington or Jerusalem than one that has never struck oil at all. Not only does quick cash run the risk of causing internal conflict, but it also runs the risk of giving Somalia and dubious foreign ministries a real-life example of the governance failure they already claim Somaliland would have as a recognized state. 

Three points stand out for me. First, Somaliland’s resource case has grown more concrete, with Genel now attaching a specific figure roughly 650 million barrels to the Toosan-1 prospect and keeping the license active through drought relief and seismic work even as it defers actual drilling. Second, timing has slipped from 2026 to a working 2027 target, driven less by conditions inside Somaliland than by spillover from wider Middle East instability, which has already paused Genel’s activity elsewhere. Third, and most significantly in my assessment, Somaliland has moved from passive bystander to active dealmaker, trading port access, mineral rights, and basing rights for the recognition it has sought since 1991. This remains the single biggest variable in Somaliland’s hydrocarbon file. Contracts signed by an unrecognized government carry financing and insurance uncertainty that a recognized state simply does not carry, and any wave of recognition, even a partial one, would immediately reshape how lenders and oil companies’ prices risk for better or worse.

Berbera’s location gives Somaliland a rare double advantage. Sitting directly on the Gulf of Aden at the southern gateway to the Red Sea/Suez corridor, the port already occupies one of the world’s busiest shipping lanes, and DP World’s investment there has positioned Somaliland as a credible alternative logistics gateway to Djibouti, a role made more valuable by regional instability such as Houthi attacks on shipping and recurring Suez disruptions.  

I want to be direct about economics, because this is where I think Somaliland’s decision-makers most need clarity rather than optimism. Completed successfully, oil is the single fastest route Somaliland has to genuine economic transformation. A confirmed millions of barrels of resources, exported through a port Somaliland already controls and DP World has already modernized, would generate government revenue at a scale that education, health, roads, and public-sector wages currently cannot approach through customs receipts and donor support alone. It would also strengthen Somaliland’s position in regional and international negotiations. Countries such as Ethiopia, the Gulf states, and the USA are likely to place greater strategic value on a nation that produces energy than one known only for hosting a port. That is the development case, and I believe it is real. But I do not think it is honest to describe this as a safe bet, and the same file that makes the development case also makes the collapse case. 

To maximize the benefits of its oil resources, Somaliland should prioritize three actions. First, establish a transparent revenue management framework and an independent oversight body before commercial production begins. Second, pursue international recognition and investment agreements simultaneously to strengthen both political legitimacy and investor confidence. Third, ensure equitable benefit-sharing by guaranteeing local communities’ fair access to jobs, compensation, and infrastructure. Managed with transparency and inclusion, Somaliland’s oil resources could accelerate its journey toward long-term economic self-reliance and international recognition. Poor governance, however, risks turning this opportunity into a source of instability. 

If the greatest risk lies in the sequence where resource wealth arrives before the institutions needed to manage it, then the solution must also follow a deliberate sequence. Somaliland should prioritize building strong governance before generating oil revenues. The following three critical steps should be completed before the first commercial barrel is exported; 

• Legislate the rules before the revenue exists to fight over: Pass the revenue-management law now, while there is no money yet to make it politically contested. Establish an independent oversight body as an early-stage sovereign wealth fund with real audit power, not an advisory committee before the first commercial barrel is produced. The test isn’t whether Somaliland writes a law eventually. It’s whether the law exists before anyone has an incentive to weaken it. Genel’s own drift from 2026 to 2027 is unearned time; the government doesn’t get credit for using it, only penalized for wasting it. 

• Negotiate recognition and contracts as one instrument, not two: Somaliland’s diplomatic window is Israeli recognition, active US basing talks, and a live House bill won’t stay this open indefinitely. Use it to lock in production-sharing terms that are internationally bankable now, rather than terms negotiated later from a weaker position after regional attention moves elsewhere. Recognition raises the credibility of any contract signed; a transparent contract raises the credibility of the recognition case. Sequencing them together, in the same negotiating track, means Somaliland isn’t trading away leverage twice for the same outcome. 

• Write clan and local benefit-sharing into law, not into goodwill: Somaliland faces important internal challenges. Its clan-based political balance could come under pressure if oil revenues are not managed fairly. Disputes over resource ownership, local benefits, and contested territories could undermine national unity. A transparent, legally binding revenue-sharing framework that ensures affected communities receive equitable benefits is therefore essential. Without it, petroleum development risks fueling internal divisions rather than strengthening Somaliland’s position on the international stage. 

None of the above moves require slowing down the geology. Genel’s timeline has already slipped to 2027 for external reasons. That gap is the opportunity: legislate, negotiate, and formalize benefit-sharing on a track that finishes before the wells do, not after. Managed in that order, Somaliland converts a resource windfall into the foundation for the recognized state it’s been building since 1991. Handled out of order, the sequence itself becomes the risk, not the oil and not the geopolitics, but simply the ones that came first. 

Reference: 

1. Genel Energy. (2026). Trading & operations update: Somaliland blocks. Genel Energy PLC. 

1. Ministry of Energy and Minerals. (2024). Somaliland petroleum sector operations. Government of Somaliland. 

1. Ministry of Energy and Minerals. (2023). Somaliland oil & gas sector overview. Government of Somaliland. 

1. Ministry of Energy and Minerals. (2023). Somaliland hydrocarbon potential report. Government of Somaliland. 

1. Genel Energy PLC. (2026). 2026 annual investor meeting: CEO Paul Weir update on Somaliland [meeting presentation]. Genel Energy PLC. 

About the author: 

Mukhtar Mahdi is a development and humanitarian professional with over a decade of multidisciplinary experience across humanitarian assistance, project planning and management, education, community development, economics, and public policy. He has led and supported programmes for international NGOs, government institutions, and civil society organizations, delivering sustainable solutions that strengthen institutions, improve livelihoods, and expand access to education and essential services for vulnerable communities across Somaliland. He also provides consultancy services to businesses, NGOs, government institutions, and CSOs on project design and management, strategic planning, and organizational development. Between 2017 and 2018, Mukhtar worked in Genel Energy’s seismic exploration in Somaliland Odwayne & Block SL-10B13 in partnership with China BGP Inc. 

Mukhtar holds an MA in International Humanitarian Aid, MA in International Relations, and a Bachelor’s Degree in Economics, and is a certified Project Planning & Management Professional.

The views expressed in this article are the author’s own and do not necessarily reflect the Horndiplomat editorial policy.

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