Soma Oil & Gas signed a Notice of Application for PSAs with the Somali Ministry of Petroleum & Mineral Resources on 9 December 2015. These Applications will be converted into PSAs based on negotiations with the Federal Government of Somalia. The award of any PSA is also dependent on the implementation of a Revenue Sharing Agreement between the Federal Government and Federal Member states.
A Production Sharing Agreement is a contract between a government and an exploration & production (E&P) company. The sovereign state remains the owner of the hydrocarbon resources, the E&P company receives a share of the production in exchange for the investment required to explore and produce oil and gas.