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Ethiopia to Offer 14 O&G Exploration Permits

Source: Reuters 11/24/2009, Location: Africa

Ethiopia will offer up to 14 licences for oil and gas exploration over the next three years despite threats from rebels who say they will attack oilfields run by foreigners, the government said. "We have 11 companies exploring in Ethiopia now," said Minister for Mines and Energy Alemayehu Tegenu. "We are still inviting companies to come talk to us about licensing and we hope to have a total of 25 in three years time, and that will be enough," he said.

The 11 foreign companies exploring the Horn of Africa nation include Africa Oil Corporation, South West Energy and Malaysia's state-owned Petronas. Apart from a small discovery of natural gas, which Petronas has signed a $1.9 million deal to extract, Ethiopia has not uncovered significant oil or gas deposits. The government says, however, that the Ogaden basin may contain gas reserves of 4 trillion cubic feet and points to nearby countries such as Sudan and Yemen as evidence there could be major oil deposits under Ethiopia's deserts.

The minister said Ethiopia would offer incentive packages to companies on a case-by-case basis, depending on the size of their investment. "Incentives that we can discuss include duty-free imports of machinery and refunds of exploration costs should oil or gas be discovered," Alemayehu said.

Ogaden National Liberation Front (ONLF) rebels in 2007 attacked an oil exploration field owned by a subsidiary of Sinopec, Asia's biggest refiner and China's second-largest oil and gas producer. Sinopec then pulled out of the Ogaden region. Most of Ethiopia's exploration activities have centred on the vast province, which borders unstable Somalia. Insurgents this month said they had seized seven small towns in Ogaden and again warned foreign firms not to invest. Alemayehu dismissed the rebel threat and said Ethiopia was also offering companies the chance to explore in five basins outside of Ogaden.

"There was an attack in 2007 but companies exploring Ogaden are now secured by our military," he said. "We don't see any problems near our camps and exploration areas. The rebels make claims that aren't reflected on the ground." The ONLF wants autonomy for the region, whose population is ethnic Somali, and the group has been waging an on-and-off campaign for more than 25 years. Addis Ababa says the ONLF does not have the support of the local population and is being funded by archenemy Eritrea to try to overthrow the government.

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