Ministry of Mines (MoM) dismisses claims being made about the central government agreeing to transfer the natural gas field in Ogaden Basin to US companies. Nonetheless, the ministry has confirmed that US companies are potential prospects to take over the field.
It can be recalled that in last August, Ethiopia received its first natural gas certificate for the energy resource located in Somali region, Ogaden Basin, following a comprehensive five month study carried out by Netherland, Sewell and Associates, Inc (NSAI) which proved that there were oil and natural gas reserves in Ethiopia.
The certificate confirmed the presence of 7 trillion cubic feet of natural gas reserve in the area, which was controlled by different companies on various occasions to develop the resource, without anything materializing.
The last company that took over the field was Poly GCL, a British Virgin Island registered company, which lost its concession by MoM owing to intangible results despite possessing the area since 2013.
After different signaled warnings to start operations falling on deaf ears, in September, MoM revoked the natural gas and crude oil exploration and production license of Poly GCL.
Since then the ministry has been engaged on changing the face of the history seen in the sector by actively looking for development partners with a good track record.
Takele Uma, former Minister of Mines, during his leadership era said that most of the companies that had agreed with the Ethiopian government to develop the natural gas did not have a well-established reputation and some of them were not even known, “This is one of the reasons that have hurdled development in the mining sector.”
He explained that since internationally renowned oil companies got to see the certificate, they have been showing interest, “We have approached some of them directly.”
“Since NSAI approved the reserve through the involvement of the US ambassador in Ethiopia, I had talked with some US companies and we have had fruitful discussions with them through webinar. Similarly, as per the order of PM Abiy Ahmed I have traveled to UAE and discussed with the well-known gulf oil company Abu Dhabi National Oil Company /ADNOC to convince them to invest on the energy sector in Ethiopia. Similarly, in collaboration with Turkish Ministry of Trade I also visited Türkiye and directly discussed with Çalik Energy to invest in Ethiopia,” Takele told Capital in a recent interview and added that there are also other huge companies including the Russian GAZProm, and Sinopec and China Petro of Chinese who have become interested since the certificate was disclosed.
“As you may recall, we had terminated our contract with the Chinese firm Poly GCL. The company was incapable so we are directly approaching trustworthy and reputable huge companies in different countries to change the history of the sector,” he explained.
However, he dismissed the claim that cited that during the PM’s visit to the US, certain US oil companies were promised an award for the natural gas field site in eastern Ethiopia.
“We are talking with the Russians, UAE, Turkey and US companies including Baker Hughes and Chevron and Chinese companies who have shown their interest. We are waiting for a company with a strong track record to table a proposal for our country. Since I wasn’t there with the team which paid a visit to the US, I am not sure about their discussion. But one thing I can assure you is that we are still waiting for the best company so as to take on the project,” he elaborated.
However some experts in the sector and Kaleyesus Bekele, CEO of Origins Media, viewed the issue at an angle that huge companies interests are far beyond natural gas fields and require additional resources to lure these renowned companies to the country.
“The certified reserve amount is not big for the companies stated by the government but they may have interest if there is a possibility to get additional reserve at the area,” Kaleyesus, who closely follows the petroleum exploration and reporting told Capital whilst sharing insights on the progress of the sector over the years.
“Small companies interest might be sparked, however, companies weather in US or others that MoM mentioned will certainly not be interested in such small amounts of reserve,” he added.
“The sedimentary basin at Ogaden is very big that covers 350,000km2, while as far as my knowledge about 50 wells have only been drilled in the area, which is very small. So if additional exploration wells shall be drilled more resources can be realized. However, the approved resource confirmed by the MoM is not big,” Kaleyesus elaborated.
However, he confidently stated that the government will give the field for well-known companies that have money, technology, and knowledge to utilize the resource in the near future.
In the second Home Grown Economic Reform (HGER) that will be approved by the Council of Minister in the coming weeks, the mining sector is stated as one of the priority sectors.
“Regarding the natural gas development, we have targeted to commence development, which is at the second stage after exploration in the second HGER which will be a three years economic development plan,” Takele explained.
Natural gas development includes the construction and installation that will be followed by production of methane gas that is transformed to ammonia, which means the country stands a chance to produce fertilizer.
In related development, on Wednesday January 18, on his social media account, Takele disclosed the discovery of over two billion barrels of crude oil at parts of the Abay Basin.
He said that oil exploration is being conducted in 5 basins throughout Ethiopia. “In an oil exploration study conducted in Warra Iluu, part of the Abay basin, the study showed that there are more than 2 billion barrels of crude oil.”
Oil seeps were first discovered in the Woreilu locality during the imperial regime. Ogaden, Gambela, Mekele, Omo Valley and Abay are the five sedimentary basins considered to be highly prospective areas for oil and gas discoveries.
Currently, the Ogaden and Gambela basins have been relatively better explored compared to the other basins.