Ethiopia, Malaysian oil firm signe US $1.9 million deal

August 11, 2007 (ADDIS ABABA) — Ethiopia has signed a $1.9 million deal allowing Malaysian state oil firm Petronas [PETR.UL] to develop natural gas in its Ogaden region where rebels have warned oil companies to stay away, an official said on Aug 10.

“The agreement signed between Ethiopia and Petronas focuses on the development and marketing of Kalub and Hilal gas deposits in the Ogaden,” a Ministry of Mines and Energy official, who declined to be named, told Reuters .

Ethiopian Minister of Mines and Energy Alemayeu Tegenu signed the agreement with Petronas in Kuala Lumpur last month after the Malaysian firm won a tender for the Kalub and Hilal areas, the official added.

The official said under the accord Petronas was expected to lay down a pipeline to transport the gas to a nearby port.

Ethiopia is landlocked and possible options would be in neighbouring Somalia where Ethiopian troops are helping the interim government — either to Bosasso in the Puntland region or Berbera in breakaway Somaliland, analysts say.

The Ogaden Basin, a gas-prolific area covering 350,000 sq km, is believed to contain gas reserves of some four trillion cubic feet, according to the government.

Ethiopia says it has broken the backbone of the rebel Ogaden Nation Liberation Front (ONLF) which attacked a Chinese-run oil exploration field in April killing 74 people.

But the separatist group denies that, and has repeatedly warned foreign energy firms from operating in the area which borders Somalia.

“Pursuing oil and natural gas exploration activities in Ogaden at this stage can only be characterised as gross corporate irresponsibility,” the ONLF said this week.

Petronas is also engaged in the exploration of oil in the Gambella Basin in western Ethiopia.

(Reuters)