Ethiopia renews fuel supply deal with Sudan
By Tesfa Alem Tekle
January 21, 2010 (ADDIS ABABA) – Ethiopia and Sudan has signed a new oil supply agreement as initial deal enters into expiry.
Accordingly, the Ethiopian Petroleum Enterprise (EPE), the sole importer of the country’s fuel consumption, and Sudan Petroleum, the benzene supplier, had signed a one-year renewal agreement recently. Sources indicate.
The renewed deal is said to raise the volume of Sudan’s fuel supply to the neighbor country by over 50%.
The Ethiopian Petroleum Enterprise has planned to import 2,176,188 tonnes of fuel including benzene for the current fiscal year with a projected budget of 19.2 billion birr (some 1.5 Billion USD).
Ethiopia imports 80 % of its total demand for petroleum from neighboring Sudan, easing the horn of Africa country’s massive cost on oil imports as fuel import bills from abroad burdens costs including for inspection and vessel prices.
Ethiopia spends over 50 % of its total export earnings to meet nation’s fuel demand and Sudan has now become the major source for the fact that it is only next door. According to Ethiopia petroleum enterprise, Ethiopia saves millions of dollars every year by importing from neighboring Sudan than importing oil all the way from the Middle East and other destinations abroad via the port of Djibouti.
In return, the vast country of Sudan imports agricultural products and livestock from Ethiopia. It actually is one of the biggest importing countries of Ethiopian products.
Sudan is now the largest oil producer in the sub-Saharan Africa, next to Nigeria and Angola. Recent figures indicate that the country currently produces over 400,000 barrels of crude oil every day.
According to oil and gas journal, Sudan holds proven reserves of 563 million barrels in 2006.more than twice with what was proven in 2001.With oil exploration efforts still underway the Sudanese energy minister estimates country’s total oil reserves at 5 billion barrels.
Oil hungry Ethiopia has not yet 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.
Last month Ethiopia’s Minister for Mines and Energy Alemayehu Tegenu told the Reuters news agency that Ethiopia will offer up to 14 licences for oil and gas exploration over the next three years despite threats from rebels who repeatedly threaten they will attack any oil fields run by foreigners.
Currently 11 companies, including Africa Oil Corporation, South West Energy and Malaysia’s state-owned PETRONAS are exploring in Ethiopia and the
Ethiopian government is still inviting other companies to come and license for oil exploration offering incentive packages which include duty-free imports of machinery and refunds of exploration costs
The state Ministry for Mines and Energy hopes that a total of 25 foreign companies would get engaged over the next three years time.
Despite Ethiopia’s open-handed offer for foreign companies to come and invest on the sector, many seem to be reluctant to accept the offer for the very reason that security situation remaining un-guaranteeing in the oil promising vast province of Ogaden, where Ogaden rebels are active.
In 2007, the Ogaden National Liberation Front (ONLF) rebels, who fight for the autonomy of the region, attacked an oil venture run by China’s second-largest oil and gas producer, Sinopec, and killed 65 people including 9 Chinese.
However, Ethiopian officials now say that the rebels in the region are defeated; no more a threat and they guarantee that despite the one incident in 2007, the volatile region is now secured by The Ethiopian military. A claim the rebels completely deny.
The rebels launch an on-and-off attack. Addis Ababa has designated the group as a terrorist organization and says that the ONLF does not have the support of the local population and is rather funded by arch-foe Eritrea to try to overthrow the government.
(ST)