Soma Oil & Gas Hold­ings Ltd., chaired by for­mer U.K. Con­ser­v­a­tive Party leader Michael Howard, has pro­posed a deal with the So­mali gov­ern­ment that may grant it as much as 90 per­cent of the coun­try’s prospec­tive oil rev­enue.

A draft pro­duc­tion-shar­ing agree­ment, ob­tained by Bloomberg from an of­fi­cial close to the ne­go­ti­a­tions, sets the state’s share of rev­enue on the first 25,000 bar­rels per day at 10 per­cent if found at a depth of greater than 1,000 me­ters (3,281 feet) and when oil costs less than $70 a bar­rel.

If out­put ex­ceeds 150,000 bar­rels, So­ma­li­a’s take rises to 30 per­cent. Crude for de­liv­ery in June fell 0.4 per­cent to $57.30 a bar­rel at 4:45 p.m. in Lon­don on Thurs­day.

Any deal with So­ma­lia will in­clude terms that are “fair and bal­anced” and re­flect those signed in other high-risk, off­shore oil and gas ju­ris­dic­tions, Chief Ex­ec­u­tive Of­fi­cer Robert Shep­pard said in an e-mailed re­sponse to ques­tions on May 27.

“The pro­pos­als be­ing dis­cussed are in line with cur­rent in­dus­try stan­dards.”

So­ma­lia is try­ing to at­tract in­vestors to help re­build its econ­omy af­ter African Union-backed gov­ern­ment forces re­gained con­trol of parts of its cen­tral and south­ern re­gion seized by al-Shabaab in an in­sur­gency that be­gan in 2006.

The Horn of Africa na­tion is sched­uled to hold a gen­eral elec­tion in 2016, the first since 1967, ac­cord­ing to the Her­itage In­sti­tute, a Mo­gadishu-based re­search or­ga­ni­za­tion.

Oil and gas out­put may start by 2020 af­ter ex­plo­ration work showed the po­ten­tial for “huge” off­shore de­posits, for­mer Pe­tro­leum Min­is­ter Da’ud Mo­hamed Omar said in Feb­ru­ary.

The gov­ern­ment is draft­ing a pro­duc­tion-shar­ing-agree­ment model be­fore sign­ing any deals, the Pe­tro­leum Min­istry said April 20. “Noth­ing has been signed and there are no de­vel­op­ments,” Fa­tima Mo­hamed, per­sonal as­sis­tant to Pe­tro­leum Min­is­ter Mo­hamed Mok­tar Ibrahim, said by phone on May 25 af­ter be­ing asked to com­ment on the Soma pro­posal.

The draft agree­ment calls for the Lon­don-based com­pany to be granted a four-year roy­alty hol­i­day for oil and gas found less than 1,000 me­ters be­low the sea sur­face.

Deeper finds should carry a six-year mora­to­rium, the doc­u­ment shows. Soma also re­quested a mora­to­rium on taxes for at least 10 years.

Johnny West, founder of Berlin-based OpenOil, the world’s largest pub­lic on­line data­base of oil con­tracts, com­pared the terms of the Soma PSA to nine “early-stage” off­shore African con­tracts, in­clud­ing post­war Liberia, that have po­ten­tially high costs, high ex­plo­ration risk and var­i­ous de­grees of po­lit­i­cal risk.

“None of them de­fer sig­nif­i­cant rev­enue streams to the gov­ern­ment for as long as Soma,” he said. “The next low­est cap on up­side to the gov­ern­ment of a mega-find is ef­fec­tively 60 per­cent of profit, half as much again as in the Soma deal,” he said in a phone in­ter­view.

Soma pro­poses that if oil prices are at $70 to $150 a bar­rel, the com­pany re­ceives 70 per­cent of rev­enue for the first 25,000 bar­rels and 50 per­cent on pro­duc­tion in ex­cess of 150,000 bar­rels per day.

The com­pany also of­fers the gov­ern­ment 50 per­cent for the first 25,000 bar­rels and 30 per­cent for pro­duc­tion above 150,000 bar­rels if oil rises above $150 per bar­rel — which would be a record high.

“Nor­mally, fis­cal and com­mer­cial terms for pe­tro­leum ex­plo­ration, de­vel­op­ment and pro­duc­tion are care­fully crafted by the host gov­ern­ment to bal­ance the per­ceived pe­tro­leum prospec­tiv­ity of a re­gion,” said Michael McWal­ter, an in­ter­na­tional oil and gas spe­cial­ist and for­mer ad­viser to the Ghana­ian gov­ern­ment.

“If oil and gas are abun­dant, the gov­ern­ment takes a greater per­cent­age of the net value of the pe­tro­leum af­ter costs have been re­cov­ered, and con­versely if not so abun­dant, the gov­ern­ment takes less.”

The po­ten­tial agree­ment with Soma would be a “ter­ri­ble deal for the So­mali peo­ple,” Barn­aby Pace, a So­ma­lia re­searcher for Global Wit­ness, a Lon­don-based watch­dog, said in an e-mail on May 21.

“All par­ties should heed the United Na­tions Mon­i­tor­ing Group’s call for a mora­to­rium on all new oil deals. A dash for oil may fur­ther desta­bi­lize So­ma­lia.”

Soma has spent $40 mil­lion on seis­mic sur­veys of 60,000 square kilo­me­ters (23,166 square miles) off the So­mali coast, ac­cord­ing to the com­pa­ny’s web­site.

In No­vem­ber, Shep­pard said the com­pany would give the gov­ern­ment its processed seis­mic data by “late this year, early next year.”

The data will be trans­ferred to the Pe­tro­leum Min­istry by the end of the sec­ond quar­ter, Shep­pard said this week.