Last updateDim, 25 Jan 2015 12pm

Oil and gas exploration in Ethiopia

Ethiopia intensifies oil and gas exploration - Ethiopia is intensifying oil and gas exploration in the country following discoveries in Mozambique, Kenya, Uganda and Tanzania, State Minister for Mines, Tolessa Shagi said on Monday.

“There have been new discoveries starting from Mozambique, Uganda and Tanzania. We are eager in Ethiopia after Kenya’s discovery,” Tolesa told journalists after launching an Ethiopian bid to join the Extractive Industry Transparency Initiative (EITI), aimed at enhancing accountable use of mineral wealth.

There is currently no commercial production of oil and gas in Ethiopia. But extensive exploration is continuing. Experts say proven oil reserves are estimated at 430,000 barrels and 113 billion cubic metres of gas. Studies conducted in 2005 show the Ogaden region holds the most potential.

“The oil and gas exploration is at its peak. There is potential. There are rock associations that can create oil and gas. The exploratory drilling that have been conducted so far have not been enough to confirm them. We hope to conduct more exploratory drilling,” the minister told journalists.

Geologists from oil exploration Malaysian firm, Petronas, believe Ethiopia’s Gambella Basin, which has similar characteristics as Southern Sudan, could produce Ethiopia’s first proven oil reserves.

Petronas invested US$100 million to explore the Gambella Basin in 2003. The government subdivided the Ogaden region into 21 exploration blocks. So far, there have two gas discoveries in the region.

“If we get oil and gas, it would contribute to our economic growth and infrastructure investment growth. We hope we would get. The exploration is at its peak. We are doing very well,” Tolessa said.

Exploration rights have been changing hands in the high-potential basin. In 2009, Africa Oil Corporation of Canada bought an 85 per cent stake in four blocks - 2,6,7 and 8 - in the Ogaden region. The firm also bought 50 per cent stake in Adigala Block from Lundin Petroleum AB of Sweden.

Tolessa said there was high optimism Ethiopia could strike the black gold within the next six years.

He said the country’s mineral potential would also change drastically as the East African nation begins to earn revenue from international firms.

Admitting that Addis Ababa was not satisfied with the earnings it was receiving from the mining sector, Tolessa said ongoing developments in Ethiopia’s mining sector would substantially raise the revenues.

“There are many new discoveries that would increase revenue, apart from oil and gas, we have potash. We hope to finalise these ongoing developments within a minimum of three years,” the minister stated.

Allana Resources of Canada is currently preparing to start the drilling of potash, a key mineral used in the manufacture of fertilizer. A Chinese firm will take a 35 per cent stake, valued at US$285 million, in the potash project in Ethiopia.

Other minerals in Ethiopia include tantalum and Niobium. Ethiopia exported 96,600 kgs of this mineral, currently exploited by a state-run firm.

Ethiopia hopes to increase the Foreign Direct Investments (FDI) inflows into the mining sector. The minister revealed current inflows stood at 20 billion Ethiopian Birr (US$1 billion).

Pana 18/03/2014