August 3, 2011 / 3:55 PM / 7 years ago

Ethiopia says eyes gas production in six years

* Eleven firms licensed in 31 blocks

* Chinese firm to spend $4 bln

By Aaron Maasho

ADDIS ABABA, Aug 3 (Reuters) - Ethiopia, which has seen a surge in requests for exploration rights, hopes to produce gas from its huge and under-developed reserves in its Somali Region in six years time, an official said on Wednesday.

Eleven companies have now been granted licences to develop 31 blocks out of 41 throughout the Horn of Africa nation, which believes its Ogaden basin in the south-eastern province may contain gas reserves of 4.7 trillion cubic feet of gas and major oil deposits.

Chinese firm PetroTrans signed a deal in July for concessions to Ethiopia’s Calub and Hilala gas fields. The company will spend $4 billion to develop the reserve, according to the ministry of mines.

“Our effort is to develop the discovered resources as quickly as possible,” Ketsela Tadesse, head of licensing at the Ministry of Mines, told Reuters in an interview.

“In five or six years time there may be a chance to produce gas,” he said.

Ketsela said “several” firms have filed requests to explore oil and gas in the country’s Ogaden, Abay, Mekelle, Metemma, Gambela and the Southern Rift sedimentary basins.

Licences have been awarded for 31 out of more than 40 recognised blocks, of which 18 are in the Somali Region, he said.

“All these regions are underexplored, but companies are now interested to work with us,” Ketsela added.

Tullow Oil , Epsilon Energy Limited and Pexco Exploration are among the foreign firms that have been granted licenses in the last three years, Ketsela said.

REBEL THREAT

PetroTrans’ deal, however, comes amid security threats in the Somali Region, where rebels threaten the exploration activities of foreign firms.

The Ogaden National Liberation Front (ONLF) is fighting for independence for the mainly ethnic Somali province - also known as the Ogaden — and regularly warns foreign oil and gas companies to stop exploring there or face attacks.

“Cordoning large tracts of land in Ogaden for this nefarious project will create havoc in the delicate drought-prone eco-system of Ogaden territory and destroy the livelihood of millions,” the group said in a statement of the recent agreement.

The ONLF said the $4 billion allocated by PetroTrans would be used for investment to “arm government-allied militia” in a bid to defeat the rebels.

Ethiopian forces launched an assault against the ONLF, which has been fighting for more than 20 years, after a 2007 attack on an oil exploration field owned by a subsidiary of China’s Sinopec Corp.

Analysts say the rebels have been severely weakened ever since but can hamper development with hit-and-run attacks.

“The door is open for private investors,” Ketsela said of the Somali Region. (Editing by George Obulutsa and Keiron Henderson)

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