US firm to undertake oil exploration in Ethiopia
Oct 22, 2005 (ADDIS ABABA) — An American company, Afar Exploration, is to venture into petroleum exploration project in the Afar Regional State, in eastern Ethiopia, the Ethiopian Reporter said.
Afar Exploration asked the Ethiopian Ministry of Mines and Energy for an oil exploration license that would enable it to prospect for crude oil in the sedimentary basin in the Afar Regional State.
The company asked the Ministry to be given an exploration area covering 18,000 sq.km. in north Afar.
A senior government official told The Reporter that the Ethiopian petroleum experts were satisfied with the “commendable” project proposal. The official said the petroleum and the legal experts of the Ministry were evaluating the proposal for a long time.
Officials of Afar Exploration and the Federal Ministry concluded the negotiation last Monday. The Ministry will soon forward the proposal to the Council of Ministers for endorsement.
After the approval, the Ministry and the company would sign oil exploration and production share agreement. The Ministry granted five oil exploration licenses in the past two years.
The giant Malaysian company, Petronas, took four licenses that enables it to prospect for oil in the Gambella and Ogaden basins. This week the ministry conferred a license to another Malaysian-based company, Pexco, which planned to search for oil in Ogaden.
The Afar basin is one of the five sedimentary basins in Ethiopia. Unlike Ogaden and Gambella the afar basin is not yet explored.
Ten years ago two American companies, Hunt and Maxus, commenced a geophysical survey in the Ogaden basin. But after a short stay the companies left the country for various reasons. Hunt, which discovered oil reserves in Yemen, drilled one exploration well in El-Kuran locality in the Ogaden basin. The company, based in Houston, Texas, left. It was compelled to close the project in Ethiopia because of budget constraints. Maxus cancelled the project due to the compelling security problem encountered in the exploration area some years ago.
Americans are not new to the history of oil exploration in Ethiopia. Tenneco, an American company which was prospecting for crude oil in the Ogaden basin in the 1960s, discovered huge natural gas reserves in Caleb and Hillala localities in 1973. Tenneco noted oil inflows in the exploration wells it drilled in several localities in the Ogaden basin. Though the company had signed an agreement with the imperial regime valid for 50 years, it was expelled by Col. Mengistu’s dictatorial leadership. Northern American company Sinclair had also undertaken geophysical survey in the Ogaden.
“Everything has changed. The current Ethiopian government has transformed the country to a free-market economy. It is time for international oil and mining companies to invest in Ethiopia,” says a senior government official.
The oil price hike motivated international companies to expand their exploration areas. The international oil market this year registered a record high price, 67 dollars per barrel. Consequently, oil companies are taking more blocks in different countries.
Ethiopia, too, hopes to benefit from the boom. Officials of the Ministry of Mines and Energy are optimists. “With the help of God we will discover oil in the coming few years,” they say.
(The Reporter/ST)