Ethiopia to offer 14 oil permits next year

November 25, 2009 (ADDIS ABABA) – Ethiopian government is preparing to offer 14 oil and gas exploration permits next years to attract foreign investors to the landlocked country despite the shaky security conditions there.

There are 11 oil firm working the Horn of Africa country but excepted the Malaysia’s state owned Petronas, the oil sector in Ethiopia remains dominated by small companies which facing difficulties to get credit for financing under the current global financial crisis.

“We are still inviting companies to come talk to us about licensing and we hope to have a total of 25 in three year’s time, and that will be enough,” said Alemayehu Tegenu Ethiopian Minister for Mines and Energy in an interview with Reuters this week.

The government believes the Ogaden basin, which covers 350,000 sq km (135,100 sq miles), contains gas reserves of some 4 trillion cubic feet. Officials point to neighboring countries such as Sudan and Yemen as evidence there could be major oil deposits under Ethiopia’s deserts.

The minister further pledged that his government would offer incentive packages to companies but added it would depend on the size of the 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.

He also dismissed reports about threats by the rebel Ogaden National Liberation Front adding there would be five basins out of the troubled region.

“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.”

Ogaden rebels attacked an oil field in April 2007 where the separatist group killed 74 people, including nine Chinese employees of Zhongyuan Petroleum Exploration Bureau, part of Sinopec, China’s biggest refiner and petrochemicals producer.

(ST)