- -Ethiopia welcomes Russian oil, gas companies
- -Ethiopia eyes new oil exploration areas
- -Ethiopia: Petronas Signs Gas Development Agreement
- -Ethiopia to Tender Blocks in Ogaden Basin
- -Ministry to Revoke SIL's Petroleum Development License (January 14, 2006)
- - SIL to invest 1.5 billion USD in the mining industry (Dec 30, 2003)
- - Calub to be given to private compnaies on concession (Feb 19, 2003)
- - Russians sign for 50 percent shares in Calub (February, 2002)
- - World Bank Leaves Off Extending Loans to Calub (August 19 - 26, 2001 )
- - American Company Contemplates Calub Gas Exploitation (August 2001)
- - Africa "Key Source" for Energy Supply and Development Senior U.S. energy
official testifies before Congress March 16 2000
- - Sicor plans 375-mi Ethiopian pipeline - January 2000
- - Small firm signs $1.4 billion deal to develop gas project in Ethiopia:
- - Ethiopia Signs $1.4 Billion Deal With U.S. Firm Sicor: Reuters; December
- - A Second Wind For Calub Gas February 1999
- - Ethiopia withdraws bid for sale of gas company February 02, 1999
- - Inventory of fossil fuel extraction projects financed by World Bank Group,
mid-1992 to 1997
- TAARIIKHDA SHIDAALKA OGAADENIYA
Ethiopia welcomes Russian oil, gas companies
February 13, 2008 (MOSCOW) -– Ethiopian Trade and Industry
Minister Girma Birru said Wednesday that the Ethiopian government welcomed
Russian oil and gas companies’ plans to develop deposits in Ethiopia.
The visiting minister was speaking following a meeting of a
Russian-Ethiopian government commission.
Birru said that, in particular, Russian oil major Lukoil was
seeking to develop oil and gas fields in the country.
In the eighties the Soviet Petroleum Exploration Expedition
(SPEE) drilled nine deep gaz wells from 1982 to 1993 in the region of Calub.
The Calub gas reserves are estimated at 2.7 trillion cubic feet
(TCF) while the Hilala gas reserves are estimated at 1.3 TCF. Ethiopia also
plans to lay two pipelines - 80 km from Hilala to Calub and 700 km from Calub to
Different countries, China, India, Malaysia and the British
White Nile company showed interest in Ethiopia’s oil exploration however the
political instability particularly in Ogaden which is believed to contain huge
amounts of oil reserves hinder the economic exploitation of oil resources.
Also, the Gambella basin is one of the five sedimentary basins
found in Ethiopia, which are expected to be oil prospective.
Ethiopia eyes new oil exploration areas
The Reporter (Addis Ababa)
Saturday, 19 January 2008
there are five sedimentary basins believed to be prospective for oil discovery
in Ethiopia, much of the oil exploration activities hitherto have been carried
out in the Ogaden basin, eastern part of the country. The Ogaden, Gambella, Omo
Valley, Abay Gorge and Mekelle are the five sedimentary basins found in
After the huge amount of oil discoveries in the 1930s in some Middle Eastern
countries, international petroleum companies became interested in the Ogaden
basin, whose age is equivalent to that of the basins in Saudi Arabia and Yemen.
Studies indicate that the geological formation of the Ogaden basin and its
maturity is similar to some of the basins in the Middle East.
The history of oil exploration in the Ogaden basin dates back to the early
1940s. Several companies undertook exploration activities in the region during
the imperial regime. Sinclair (American), Elwerath (German), Voyager Group
(Canadian), and White Stone (American) are some of the international companies
which had undertaken geological surveys in the region between 1944 to 1975. The
American oil company Tenneco, which conducted an extensive seismic survey and
drilled several exploration wells, discovered a natural gas reserve in Calub and
Hilala localities in 1972. Some eight companies conducted different geological
studies in the Ogaden basin during the imperial regime. Later on, during the
Derg regime, the Russian company Soviet Petroleum Exploration Expedition (SPEE)
conducted seismic surveys that covered thousands of squares of kilometers. The
company was operational in the Ogaden from 1979 to 1992.
SPEE collected numerous geological data and drilled dozens of exploration
wells. It also drilled exploration and gas production wells in the Calub and
Hilala gas fields. The company also confirmed the gas reserves discovered by
Tenneco. The gas reserve in the two localities is estimated at 116 billion
In the early 1990s, two American companies-Maxus and Hunt Oil-conducted
petroleum studies in the Ogaden basin. Both companies conducted seismic serveys
and Hunt Oil drilled one well which turned out to be dry. However, oil and gas
inflows were noted in several wells drilled at different times in El Kuran,
Hilala, Sillabo and Magan. A small amount of non-commercial crude oil reserve
was also discovered in Hilala. For one or other reason all the companies focused
on Ogaden. So far, 48 wells have been drilled in Ethiopia and 46 of are in the
Ogaden while two are found in the Gambella basin.
Until recently, there was no company which was interested in exploring the
other sedimentary basins. The Malayisian oil and gas giant, Petronas, was the
first company to engage in exploration project in the Gambella basin . In June
2003, Petronas and the Ethiopian Ministry of Mines and Energy(MME) signed a
petroleum exploration and production sharing agreement (PSA), which entitles the
company to prospect for and develop petroleum resources in the Gambella block on
a 16,000 sq.km of land. Since 2004, Petronas has been conducting seismic surveys
and has drilled two exploration wells in Jikaw and Jacaranda localities. Both
wells were dry (no gas and oil show).
The Gambella and Omo Valley are the extensions of the oil productive Muglad
and Melut basins of neighboring Sudan. Jikaw is only 175 kms east of the Sudan
border. “You can not ascertain if there was oil in the region by drilling only
two exploration wells,” says Abiy Hunegnaw, petroleum operations department head
with MME. Petronas, which is also engaged in oil exploration and production
activities in the Sudan, anticipates to drill more wells in the Gambella basin.
In August 2005, it acquired three exploration blocks in the Ogaden. It also
agreed to develop the gas reserve in the Calub and Hilala localities. The
company has signed a petroleum development agreement which enables it to extract
the gas reserve. Pexco, another Malaysian company, South West Energy, a company
registered in Hong Kong, and Lundin Petroleum, a Swedish company, have also
concession rights in the Ogaden basin. In 2005, Afar Exploartions, an American
company signed an exploration and PSA with the MME to prospect for oil in the
Afar regional State. Afar exploration was the second company to be granted a
concession outside right the Ogaden basin.
Currently, the company is conducting airborne magnetic and gravity surveys in
the Afar region. A local company called K and S has also been conducting a joint
geological study with MME in the North Wollo Zone of the Amhara Regional State.
Recently, a US-based company called Inter Global has requested MME to be granted
an oil exploration license which entitles it to prospect for oil in the Afar,
Tigray and east Amhara region.
The escalating price of oil has boosted oil exploration industry. A few years
ago, there wasn’t a single company engaged in an exploration project. MME's
efforts to attract potential investors have borne fruit in bringing in some five
foreign companies. The companies are now significantly contributing to the FDI
flow to the country.
South West Energy has also requestyed to sign a joint study agreement (JSA)
with MME with a view to conduct a geological study in a locality near Jimma
town, in the Oromia Reginal State.
As more companies come to Ethiopia, the MME wants to assign them to different
regions which are believed to be prospective for oil. There are 21 exploration
blocks in the Ogaden basin, 17 of which have already been occupied. Only four
are available for investors. However, the remaining blocks are less prospective
compared to the other blocks in the region. The ministry wants petroleum
companies to see the potentials of other sedimentary basins in Ethiopia instead
of concentrating only on Ogaden.
The British oil and gas company,White Nile Limited, last Tuesday signed a
petroleum exploration and production sharing agreement with MME which grants it
the right to prospect for and develop petroleum resources in the Omo Valley
found in the Southern Nations, Nationalities and Peoples, National Regional
White Nile is an oil and gas exploration company listed in the Lodon Stock
Exchange and operates mainly in Southern Sudan and the surrounding region. Nile
Petroleum Corporation and National Oil Company of Southern Sudan have a major
equity stake in the company.
The Omo Valley is part of the East Africa Rift. It recently became attractive
for oil exploration activity because of the oil discovery in Uganda and
Southern Sudan. White Nile and MME have signed a two year Joint Study Agreement
(JSA). In the past two years, White Nile and the Petroleum Department of MME
jointly evaluated the petroleum potential of the area and its relationship with
the Southern Sudan basins as well as the northern Kenya rift basins.
MME has revealed that White Nile acquired 29,465 sq.km of land in the Omo
Valley, adding the company will pay one million signature bonus to the
government of Ethiopia. The ministry said the company will pay 200,000 dollars
per year for community development and allocate a fund to train Ethiopian
personnel in the field of petroleum exploration and development programmes.
Mr Philippe Edmonds, Chairman and CEO of White Nile, said the company had
noted encouraging results during the JSA. He indicated that the company will
start conducting seismic surveys at the end of this year. Edmond said the
company has allocated 15 million dollars for its project. Experts of White Nile
told The Reporter that the Omo valley sedimentary basin was thick enough for the
discovery of oil. The Omo Valley and Gambella basins are extensions of the oil
productive Muglad and Melut basin in the Sudan.
“As the East Africa basins are becoming attractive, I hope your exploration
work will be successful,” Alemayehu Tegenu, Minister of Mines and Energy said to
Mr. Edmonds. “The agreement we signed with White Nile is the first in this
Ethiopian millennium. In the new millennium, we have to strive more than before
to satisfy our society's needs and to minimize the foreign currency used for
petroleum import,” Alemayehu also said.
So far the government of Ethiopia issued 12 petroleum exploration and one
By Kaleyesus Bekele
Ethiopia: Petronas Pays 80
Million Dollars for Gasfields
The Reporter (Addis Ababa)
22 September 2007
The Malaysian oil and gas
company Petronas last month paid
the Ethiopian government 80
million dollars for the Calub
and Hilala natural gas fields in
the Ogaden basin, south-east
won the international tender put
up by the Ethiopian Ministry of
Mines and Energy (MME) to
privatize the Calub and Hilala
gas fields found in the Somali
Regional State. The ministry put
up the tender in April 2006
inviting petroleum companies
interested in developing the two
gas fields discovered in 1973.
In August 2006, MME announced
that Petronas was the winner.
After a long negotiation on
the details of the gas
development project last June
MME and Petronas signed
petroleum development agreement
and production sharing agreement
(PSA), which enables the latter
to extract and market the gas
reserves in Calub and Hilala
localities. Recently, Petronas
paid the 80 million dollars
pre-development cost Ethiopia
invested on the gas fields.
A senior government official
told The Reporter that the
signing of the gas development
project and the predevelopment
cost payment were big
achievements for MME. “Eighty
million dollars is a big sum.
The ministry has never received
this amount of payment,” the
The natural gas reserve in
Calub and Hilala is estimated at
four trillion cubic feet (4TCF).
The gas fields that covers 285
sq m are found 1, 200 km
south-east of Addis Ababa. The
gas fields were first discovered
by an American company called
Tenneco during the reign of
Emperor Haile-selassie. Tenneco,
which drilled three wells in
Calub and one in Hilala, was
forced to withdraw because of
the 1974 revolution that toppled
The Soviet Petroleum
Exploration Expedition (SPEE),
which drilled additional wells
in Calub and Hilala in the 1980s
and early 90s, confirmed the gas
reserves. SPEE drilled seven
wells in Calub and three in
Hilala, 80 km from Calub. In
1998 the Chinese petroleum
company, Zhoungyan Petroleum
Exploration Bureau (ZPEB),
contracted by the Ethiopian
government, made eight of the
wells in Calub ready for
production. ZPEB was paid 5.6
million dollars for the well
Several companies which have
shown interest to develop the
gas fields held negotiations
with the Ethiopian government.
Secor, an American company,
Methanol Joint Stock and Stroy
Trans Gas, Russian companies
were some of the companies which
held negotiations with the
government. Although these
companies signed memorandums of
understanding (MOU) on different
occasions none of them were able
to sign final agreement for
Another company, which was
interested in developing the gas
fields, was SI Tech
International (SIL). The
Jordanian Company, SIL, signed
petroleum development agreement
and PSA in 2003. However, the
company was unable to commence
work on the project until 2006.
Alemayehu Tegenu, Minister of
MME, revoked the petroleum
development license given to SIL
and decided to tender the
Petronas has been projecting
for oil in the Gambella basin,
western part of Ethiopia and in
different localities in the
Ogaden basin. The company took
over the Gambella block covering
16, 000 sq km of land in 2003.
In 2005, the company secured
three blocks in the Ogaden
basin. The exploration blocks
are found in Wel-Wel, Warder,
Fer-Fer and Genale localities in
the Ogaden basin. The total
exploration area is 93,000 sq
km. The company paid over five
million dollars in signature
The company offered training
programs for over 20
professionals working in the MME
and it is also engaged in
community development projects
in the Gambella region. As part
of its assistance to the
ministry, the company upgraded
ageing petroleum data collected
from the Ogaden basin by
Petronas proposed to build a
gas processing plant and to
construct a gas pipeline that
stretches from the Calub and
Hilala gasfields all the way to
the Pot of Djibouti. In addition
to the gasfields, MME granted
Petronas two exploration blocks
called B l1 and 15. B 11 and 15,
which are very close to the
gasfields believed to be the
most promising areas for oil
discoveries. Oil were noted in
Calub and Hilala as wel as in
bll and 15.
Petronas plans to drill
exploration wells in these
areas. The company proposed to
invest up to 1.9 billion dollars
for the petroleum exploration
and development project. The
construction of the gaspipeline
and the gas processing plant
could take over three years.
If the gas development
project comes to fruition,
Ethiopia for the first time,
would be a hydrocarbon producing
country. Petronas will pay a 35
percent income tax payment and
three percent royalty fee to the
Ethiopian government. The
government will also have a 5
percent share from the annual
Petronas, wholly owned by the
Malaysian government, operates
in 35 countries in Asia and
Africa. It is engaged in oil
exploration and production
project in African countries
like Sudan, Chad and Angola.
Petronas, which was established
in 1974, is one of the top ten
leading oil companies in the
global oil industry.
Source: 2007 The Reporter.
7 August 2007: Malaysia Signs Gas Development Agreement
The Malaysian oil company Petronas and
Ethiopia’s Ministry of Mines and Energy (MME) have signed a gas
development agreement that would enable the company to develop
the natural gas reserve in the Calub and Hilala areas in east
Ethiopia’s Somali State, The Reporter said Saturday. The English
weekly newspaper reported that the agreement was signed by
Petronas President Mohamed Hassan Marican and Alemayehu Tegenu,
minister of MME, in Malaysia’s capital Kuala Lumpur. Petronas
has won the2006 international tender by the MME to award the
Calub and Hilala gas fields in the Ogaden basin.
Ethiopia: Petronas Signs Gas Development Agreement
The Reporter (Addis Ababa)
4 August 2007
Posted to the web 5 August 2007
The Malaysian oil and gas company, Petronas, and the Ethiopian Ministry of Mines
and Energy (MME) last month signed a petroleum development agreement and
production sharing agreement (PSA) that would enable the company to develop the
natural gas reserve in the Calub and Hilala localities in the Somali Regional
The agreement was signed by Alemayehu Tegenu, minister of MME and Dato Mohammed
Hassan Merrican, president of Petronas in Kuala Lumpur, Malaysia. Petronas has
won the international tender put up by the MME to award the Calub and Hilala gas
field in the Ogaden basin a year ago. In July 2006, the MME sent an awarding
letter to Petronas and since then the two parties have been negotiating on the
details of the gas fields development project in Addis Ababa and Kua Lalampur.
Petronas has also secured two exploration blocks (B11&15) in the Ogaden basin.
The blocks are found in the vicinity of the Calub and Hilala gas fields.
Petronas plans to build a gas processing plant and to construct a gas pipeline
that stretches from the gas fields to a seaport. In addition to extracting the
gas reserve, the company plans to conduct seismic serveys and to drill
exploration wells in the gas fields as well as in block 11 and 15.
The Calub and Hilala natural gas fields are located 1,200 km south-east of Addis
Ababa. The total area of the gasfields is 285sq.km.
The gas reserve, estimated at 113 billion cu. m. (4TCF), was first discovered by
an American company, Tenneco, in 1972. Later on the reserve gas was confirmed by
the Soviet Petroleum Exploration Expedition (SPEE). Ten wells were drilled in
Calub and four in Hilala. Non commercial oil reserve was discovered in Hilala by
Tenneco. Block 11 and 15 where oil and gas shows were discovered are considered
to be one of the most promising exploration areas in the Ogaden basin. In August
2005 Petronas acquired exploration areas in the Genale, Warder, Fer Fer and Wel
Wel localities in the Ogaden basin. The company has also been prospecting for
oil in the Gambella basin, south-west Ethiopia.
Petronas, one of the top ten leading international oil companies in the world,
was established in 1974. Wholly owned by the Malaysian government, the company
has 110 subsidiary companies. Petronas operates in 14 African and 21 Asian
countries. The company is active in the Sudan, Chad, Cameroon, Angola and Yemen.
Ethiopia to Tender Blocks in Ogaden Basin
Alexander's Gas & Oil Connections
volume 12, issue #5 - Wednesday, March 14, 2007
The Ministry of Mines and Energy (MME) is to tender two oil exploration blocks
in the Ogaden basin, in eastern Ethiopia. The ministry will put up an
international tender that will be inviting petroleum companies interested in
engaging in oil exploration activity in the concession areas called Block 7 and
8. The blocks are found in the Ogaden basin in the Somali Regional State. There
are about twenty blocks in the Ogaden basin and 16 of them were given to
Alemayehu Tegenu, Minister of MME, told that three companies had asked the
ministry to be given block seven and eight. Alemayehu said since different
companies had shown interest to acquire the blocks the ministry opted to float a
tender. Alemayehu added that the ministry was preparing tender document to be
soon put on an international tender.
Petronas, Pexco, Lundin and South West have concession areas in the Ogaden
basin. The basin covers 350,000 sq km. of land. The Malaysian oil and gas
company, Petronas, acquiredfour blocks in Genale, Kelafo, Warder and Ferfer
localities covering 93,000 sq km of land. The agreement was signed in August
2005. Currently Petronas is undertaking a seismic survey in Genale locality.
Petronas has won the Calub and Hilala gasfield tender put up by the MME last
April. The gasfields are located some 1,200 km east of Addis Ababa. Officials of
Petronas and the Ministry have been negotiating on the gasfield development
project. The two parties are expected to sign petroleum development and
production sharing agreements in March. The agreements would enable Petronas to
extract the natural gas reserves in Calub and Hilala localities found in the
Ogaden basin. Petronas has also asked to be given Block 11 and 15 near the Calub
and Hilala gasfields. Officials of Petronas and MME have been negotiating on the
two blocks. "We have concluded talks on the acquisition of Block 11 and 15. We
could give the blocks to Petronas together with Calub and Hilala," Alemayehu
Petronas has proposed to construct a gas processing plant and gas pipeline that
stretches from the gasfields to the port of Djibouti. The company also proposed
to drill additional wells in Calub and Hilala. So far ten wells in Calub and
four in Hilala were drilled. The gas reserve is estimated at 113.3 bn cm.
Petronas will conduct a seismic survey in block 11 and 15 and will drill
exploration well. The company has proposed to invest up to $ 1.9 bn for the gas
development project. Petronas would pay $ 75 mm pre-development cost that the
Ethiopian government spent on the Calub and Hilala gasfield.
Chinese oil firm to conduct seismic survey
Friday 12th May 2006
Chinese oil firm Zhongyuan Petroleum Exploration Bureau (ZPEB) is to start
seismic surveys in east Ethiopia's Ogaden basin next month. ZPEB and
Malaysian oil giant Petronas have agreed on the details of the petroleum
exploration project which is to be launched in the Ogaden basin next month.
ZPEB is contracted by Petronas, which was awarded blocks in the Fer Fer,
Warder and Genale regions of the Ogaden basin. The total area covers about
93,000 sq km.
ZPEB has been active in Ethiopia for some years. In 1998 it was contracted by
the Ethiopian government to make eight gas wells in Calub ready for production.
Geological data suggests that Ogaden and four other sedimentary basins in
Ethiopia are endowed with oil and natural gas. In March the Ministry of Mines
and Energy invited bidders to submit letters of interest in development of the
Hilal and Calub gas fields in Ogaden. The reserve in Calub, 1200km east of Addis
Ababa is estimated at 2.7 trillion cubic feet, while the reserve in Hilala, 75km
east of Calub, is estimated at 1.7 trillion cubic feet, which amount to a
combined total area of 285 square km. Interest was expressed by countries in the
Middle East, China, Russia and India.
Blood for oil in the Horn of Africa
On April 24, 2006, the
Ogaden National Liberation Front (ONLF), an ethnic Somalian
separatist group in eastern Ethiopia,
warned foreign oil companies against exploring for oil in their
homeland: "So long as the Somali people of Ogaden are denied
their basic rights to self-determination, the exploitation of
natural resources in Ogaden for the benefit of the Ethiopian
regime or any foreign firm will not be tolerated."
Exactly one year later,
the Financial Times is reporting that the ONLF has taken
credit for killing 65 Ethiopians and nine Chinese at an oil
exploration field in northern Ogaden.
The Chinese were employees of Zhongyuan Petroleum Exploration
Bureau, a subsidiary of the huge Chinese oil company Sinopec,
which had been
hired by the Malaysian oil company Petronas to explore for
oil and natural gas in Ogaden. But ZPEB is
far from the first foreign oil company to drill in eastern
reported Time Magazine, "Emperor Haile Selassie I made a
last desperate effort to forestall an Italian invasion by
offering to 'rent' as much as half of Ethiopia to a big U.S. or
British oil company." Ten years later Sinclair Oil nabbed a
50-year concession. Sinclair was followed by Tenneco Oil, which
discovered significant deposits of natural gas in Ogaden in
1974. But all the U.S. oil companies were kicked out by the
revolutionary Marxist regime of Mengistu Haile Mariam, who
replaced them with the Soviet Petroleum Exploration Expedition,
which drilled its own holes in the sedimentary basin of Ogaden.
Not uncoincidentally, the Soviets also provided
massive military assistance to Mengistu that enabled
Ethiopia to successfully win complete control of Ogaden from
Cold War power politics can be held at least partially
responsible for the ongoing anarchy, chaos and war that continue
to ravage the Horn of Africa and keep Somalia, Eritrea and
Ethiopia at each other's throats. But the Cold War is over, and
American and Soviet/Russian oil companies are long gone. Now
it's China's turn to get embroiled in the mess. For years, the
rebel activity in eastern Ethiopia between the ONLF and the
government has been described as a
"low-profile armed conflict." Not anymore.
-- Andrew Leonard
Ministry to Revoke SIL's Petroleum Development License
The Reporter (Addis Ababa)
January 14, 2006
Posted to the web January 16, 2006
The Ministry of Mines and Energy (MME) is to revoke the petroleum development
agreement it signed with the Jordanian company, SI- Tech International (SIL).
In 2003 the ministry granted SIL a license granting the company the right to
develop the natural gas reserves in the Calub and Hillala localities in the
Oganden basin. SIL had a plan to build a gas refinery plant, an electric power
station as well as a fertilizer and cement factories. The company previously
announced that it had allocated an initial capital investment of 1.5 billion
The company was supposed to commence work on the first phase of the petroleum
project, the construction of the gas refinery plant, in July 2004. However, it
was unable to launch the project according to schedule. In November 2005, the
minister of MME, Alemayehu Tegenu, warned SIL that the ministry would revoke the
petroleum development license unless the company started work on the project
within 90 days. Officials of SIL said they were unable to launch the
construction because of the inflated price of steel and the poor condition of
the road to the gas fields. Minister Alemayehu however, said the explanation
given by the officials was unacceptable.
The 90-day ultimatum will come to an end by next month. The ministry told The
Reporter that since the company failed to operationalize the project it would
nullify the petroleum development license.
The gas fields are located 1200 kms east of Addis Ababa. The gas reserve in
Calub, which was discovered in 1973, is estimated to be 76 billion Cu.m. The
reserve was discovered by Tenneco, an American oil company. The second gas
reserve found in Hillala locality is estimated to be 42 billion cu.m The Hillala
gas reserve was discovered by a Russian company, Soviet Petroleum Exploration
invest 1.5 billion USD in the mining industry
"At last we made it!" Mohammed Dirir
By Tamiru Geda
Many people including government officials were fed up with the frequent
interruptions in negotiations for the exploration of natural gas, in the last
Lately however, things seem to be looking up for natural gas exploration, thanks
to some committed petroleum companies which have shown keen interest in joining
the Ethiopian government, particularly the Ministry of Mines in investing and
exploring the natural gas fields of the nation.
Ambassador Mohamed Dirir said that the Minister of Mines is one of many
Ethiopians eager to see this resource available and ready for consumption. He
made the statement at the signing ceremony of the Petroleum Development and
Production Agreement, in the Hilton Addis with the Middle East based company, Si
Tech International (SIL).
Minister Mohamed expressed his happiness on the occasion. Using the same tone
that the American administrator of Iraq used after the capture of Saddam
Hussein, the Minister declared, "Ladies and gentlemen, at last we made it!" to
the cheers of delegates from government offices and representatives of SIL.
Ziad I.Kh Mango, Chairman of SIL was present to sign the agreement with the
Ministry of Mines for exploration of the Hilala gas reserves in the desert area
of the Somalia Regional State of Ethiopia.
His company, he said, is committed to invest in Ethiopia and expressed regret
that they did not do it earlier. "We are here for good and to invest USD 1.5
Billion to develop the 280 square kilometers of gas reserves in Calub and
Hillala area." Zaid also promised to work with the Ministry of Mines as a
According to the company"s work plan, it will install a GTL plant in Dire-Dawa,
with a capacity of producing 34 thousand barrels of petrol per day. It will also
produce 20 million barrels of liquid petroleum such as benzene, Kerosene and
diesel by using gas processing technology at Calub, within the next two years.
Calub to be given to private campanies on concession
By Kaleyesus Bekele
The Ministry of Mines told the Reporter last week that it was read to give the
Calub gas field to private companies on concession.
Since the effort to privatize the Calub S.C. could not be successful, it was
decided to give the gas field to private companies on concession, it was learnt.
The Ministry said it was ready to negotiate with any company which had the
know-how and the financial capacity to exploit the Calub natural gas reserve
estimated at 76 billion cu.m.
Though officials of both the Ministry of Mines and the Calub Gas S.C had held
talks with several foreign oil and gas companies to jointly develop the reserve,
their effort could not bear fruit.
Methanol and STROYTRAN GAZ, the Russian oil and gas companies, signed last week
a Memorandum of Understanding with the Ministry to develop the reserve. However,
the companies could not sign the final agreement since they did not have the
finacical resources to implement the project.
According to the Ministry, the companies came up with only the technology and
asked the government to solicit funds from the international financial
institutions. Two month ago the Ministry proposed to Prime Minister Meles Zenawi
to dissolve the Calub Gas S.C. However, Meles did not as yet approve the
The Calub natural gas reserve was discoverd in 1973 and nine wells are ready to
go into production.
Russians sign for 50 percent shares in Calub
ADDIS ABABA, February 04, 2002-- A Russian oil company, Methanol, has signed
a memorandum of understanding both with the Ministry of Mines and Calub Gas
Share Company to own 50 percent shares in Calub Gas, while it commits itself to
invest 80 to100 million USD during the initial phase.
Top executive of Calub Gas told the English weekly Fortune that the memorandum
of understanding (MOU) requires both parties to jointly develop gas fields on
the 76 billion cubic meters natural gas reserve, located 1200 kms south east of
Addis Ababa in the Somali State.
Sinknesh Ejigu State Minister of Mines and Hialemelekot Teklegiorgis Board
Chairman of Calub and State Minister of Defense signed the agreement with the
director of Methanol.
Jihad Abakoyas General Manger of Calub told Fortune that the Russian company had
agreed to form a joint venture share company owning 50 percent shares to exploit
the gas reserves.
The General Manager revealed that the plan to develop the fields involves the
construction of four refinery and petroleum extraction plants within the Calub
area, with an investment reaching about 500 million USD.
The first phase of the project consists of building the first gas refinery
Jihad revealed that the investment by the Russian company would increase through
time depending on the results obtained from the first phase of the project.
He added that knowledge and technology transfers in executing the project would
In a similar development, another five-member Russian team representing Story
Trans Gas Share Company, an oil and gas company has arrived in Addis Ababa and
begun negotiations with the Ministry of Mines to engage in oil and gas
explorations and development in Ethiopia.
According to Jihad, Story Trans is interested in exploration of petroleum in the
Ogden basin and Gambela region. He said that the company's representatives were
planning to fly to these areas for a site visit.
The delegation is currently conducting preliminary studies and is collecting
date, reports and other relevant information about the basins. Story Trans is
also interested in Calub Gas and holding talks with the officials. - Fortune
World Bank Leaves Off Extending Loans to
August 19 - 26, 2001 BY
KALEYESUS BEKELE; FORTUNE STAFF WRITER
The World Bank has reportedly suspended releasing the loan it had
pledged to extend to Calub Gas S.C. demanding the government to
privatize the 95pc share it owns in the company to continue financing
the project in return. According to our sources, the bank decided to
refrain from disbursing the loan at the beginning of the current fiscal
year. An initial survey conducted by the World Bank puts the Calub Gas
project cost at 85.96 million Dollars of which it has committed to
finance 66.31 million Dollars while the remaining is to be made up from
local sources. Following the agreement with the Ethiopian government on
June 23, 1994, the bank commenced to outlay some portion of the agreed
loan and construction was launched in September 1995.
The standard of the loan is in International Development Association
(IDA) terms with a maturity of 40 years and three years grace period.
Fortune learnt that the bank's abrupt action to withhold the remaining
amount of the loan is in a bid to pressing the government to speed up
the privatization process of the share company to be entirely controlled
by private entities. World Bank officials have declined to comment on
the issue, while the general manager of Calub, said to be out of town,
could not be available for comment. A minority share of only five per
cent in the company is currently in the hands of private businesses and
individuals, who have invested 102 million Br in aggregate. The renowned
coffee exporter, Mohamed Oksedeh, is in the list of shareholders having
stakes worth 200,000 Br in the company
The Ethiopian Privatization Agency had put Calub Gas S.C. on tender two
years ago but attempts to privatize the company failed to materialize.
An official in the privatization agency told Fortune that the bid was
thwarted because of low values offered by the prospective buyers,
questioning the accuracy of the amount of gas deposits declared to be
available for exploitation, estimated to reach 76 billion cubic meters.
According to sources, those who have shown interest in Calub say the
quantity of gas deposits, unlike other minerals such as gold, can not
specifically be predetermined. Information obtained from the agency
indicates four companies, Sheik Al-Amoudi's investment arm- Midroc,
Santafe, Matle and Norex Group, participated in the bid. The bidders
also came up with a pre-condition requesting a guarantee from the
government that ensures all the towns in the eastern part of Ethiopia,
including Dire Dawa and Harrar, would use electric power generated
utilizing gas produced by Calub. Another reason given for the delay of
the privatization process, according to the official who said he is
unaware of the bank's decision to suspend the loan, is the memorandum of
understanding signed between Calub and an American Company. The agency
official also said that the shareholders of Calub that own the five per
cent share have also objected to the tender saying that they were not
informed about it prior to the privatization process.
After the cancellation of the first bid, the agency has not shown sign
until now to issue a re-tender. The information officer at the agency
said that Calub is not included in the list of enterprises that are on
the auction block to be privatized in the short run. An American
company, Cal Tech International Corp, and China National Petroleum
Corporation, a Chinese company, have recently shown interest in Calub
Gas S.C. for a joint venture development of natural gas. However,
tangible results have not so far evolved.
The Calub Gas Project, which is thought to be a cash-cow business,
comprises three components: a commercial part consisting of preparation
and completion of the gas wells, construction and operation of the
petroleum extraction and processing plant and privatization promotion; a
regional development scheme for Ethiopians in the south eastern region;
and technical assistance to the Ministry of Mining and Energy. The
designing work of the refinery and the preparation of bid documents to
hire a contractor for building the facility were carried out by a
British firm and submitted to the World Bank, which was evaluating them
until recently. The preparation of eight production wells for
exploitation have been carried out and completed by a Chinese firm
contracted for five million Dollars.
Sources close to the project say that the cost to launch a full-scale
production, including a Urea fertilizer factory related to gas
production and revised project of constructing a pipeline extending
700kms to channel gas from the production wells to Awash, where the
refinery is planned to be erected, could escalate to the neighborhoods
of 1.5 billion Dollars. Fortune learned that so far 96 million Dollars
have been invested in the Ogaden basin. The Ogaden Basin exploration
history dates back to 1920 pioneered by Standard Oil Company that first
carried out a geologic survey. Since then 14 companies had taken
concession and conducted exploration surveys and mapping. Tenneco, an
American company at a depth of 3732 meters, discovered natural gas in
1972. Although 29 years have elapsed since gas was first discovered in
Ethiopia, the country, in a rueful turnout, has not been capable to see
the fruits of the discovery to date.
American Company Contemplates Calub Gas
MIKIAS WORKU FORTUNE STAFF WRITER
An American company, which was
contemplating to invest in power generating projects negotiating with
EEPCo last year, has now shown interest in Calub Gas S.C. for a joint
venture development of natural gas, although concrete results have not
yet materialized. Representatives of Cal Tech International Corp., who
were here a month ago, were briefed by officials of Calub Gas on the
existing potentials and were provided with strategic data and
information on the project.
Sources said that the company was requested to produce the necessary
documents, which include the company's base of registration and legal
status, funding, track records of the past three or four years, that
should all be authenticated by the U.S. government, to start negotiation
for concluding a deal. According to our sources, the company has
verbally pledged to finance the construction of the pipeline that would
be used to carry crude gas from the gas field to the central processing
plant and refinery, which is intended to be erected at Awash,
approximately 700Kms from the production wells.
The designing work of the refinery and the preparation of bid documents
to hire a contractor for building the facility were carried out by a
British firm and submitted to the World Bank, which was evaluating them
until recently. Though Cal Tech had promised to come back in two weeks
with the required documents, sources said it is now a month and there is
no sign of its coming back. This same company had written a letter of
intent last year to invest more than 300 million Dollars in power
generation, but it is unknown where the negotiations with EEPCo
Discovered in 1972, the Calub natural gas resource is estimated to reach
76 billion cubic meters and currently eight production wells stand ready
for exploitation after being prepared and tested by a Chinese company,
which was contracted for 5.6 million Dollars to undertake the job
winning a tender in 1996. The company completed preparing the gas wells
for production in late last year. Sources close to the project say that
the cost to launch a full-scale production, including a UREA fertilizer
factory related to gas production, could reach a level of 1.5 billion
Africa "Key Source" for Energy Supply and
Development Senior U.S. energy official testifies before Congress- March 16 2000??;
Africa is a "key source" of diverse energy
for the United States and will likely become the next important emerging
market in trade and investment, energy resources, and energy
consumption, a senior U.S. energy official told the U.S. Congress March
In testimony before the Subcommittee on Africa in the House of
Representatives, Calvin R. Humphrey, principal deputy assistant
secretary for international affairs at the Department of Energy, also
reminded lawmakers that Africa is the third largest oil exporter to the
United States and plays an "integral role in U.S. efforts to maintain a
diversified oil import base."
Humphrey chronicled a wide range of U.S. investment in Africa's energy
sector, which includes:
-- Chevron's participation as the managing partner for the West African
gas pipeline, which is designed to connect Nigeria's gas reserves to
markets in Benin, Togo, and Ghana;
-- Exxon-Mobil's efforts in leading the development of the Chad Export
Project (CEP), a proposed $3,500 million project to produce and
transport 250,000 barrels of oil per day from southern Chad through
Cameroon for export to world markets, including the U.S.;
-- Dallas-based Triton Energy's allocation of $191 million to invest in
the development of the Ceiba Field and continued exploration and
appraisal activity in Equatorial Guinea;
-- the U.S. firm Sicor and Ethiopia's announcement that they have signed
a $1,400 million joint venture to develop a huge gas field in the east
of the country and build a pipeline and processing units;
-- the signing by Enron, an oil and gas firm in Houston, of a power
purchase agreement to supply emergency electricity to state-owned power
utility Nigerian Electric Power Authority (NEPA) through 30-megawatt
power barges located on the coast of Lagos State.
Sicor plans 375-mi Ethiopian line
January 2000 Vol. 83 No. 1
Sicor, Inc., and the Ethiopian government
have signed a memorandum of understanding to build a 375-mi, 24-in.
natural gas pipeline in Ethiopia.
The $300-million pipeline would be part of the $14-billion Gazoil
Ethiopia project to develop synthetic fuels using gas-to-liquids (GTL)
The line would transport natural gas and associated fluids from the
Calub and Hilala fields in southeast Ethiopia to Awash. There, a planned
cryogenic liquids plant and a refinery will convert the gas and liquids
into commercial fuels using GTL technology.
Sicor plans to commence a 12-month pre-development phase in February
2000, involving feasibility, route, and market-demand studies.
The company plans to award an $800-million construction contract for the
pipeline and plant in late March 2000.
Construction could start in late March 2001 for a September 2002
Small firm signs $1.4 billion deal to
develop gas project in Ethiopia
December 20 1999
Houston Business Journal
A small, privately held Houston company
has struck a deal on a $1.4 billion energy privatization project in
Sicor Inc. and the Federal Democratic Republic of Ethiopia have signed
an agreement to form a joint venture, the Gazoil Ethiopia Project, which
will build a 375-mile natural gas pipeline and a series of processing
Sicor will hold an 80 percent stake in the joint venture, and the
Ethiopian government, 20 percent.
Sicor is a six-month-old corporation -- 70 percent of which is owned by
Chairman Ronnie F. Monk.
Monk formed Sicor from Cogen International Management, a partnership
that was in the business of assembling and predeveloping pipeline and
Sources familiar with the negotiations say Sicor's primary competitor in
the bidding was Houston-based Santa Fe Snyder Energy Co.
The project is expected to have a major impact on Ethiopia, an
agricultural country that still uses wood for fuel, causing massive
deforestation and land erosion.
In addition to providing liquid propane gas, electricity, water and
fertilizers for domestic use, the project will generate other fuel
products for export, which would greatly improve Ethiopia's foreign
exchange position. The country will become a net exporter of fertilizers
for the first time, a government spokesman said.
Under terms of the agreement, the Gazoil Ethiopia Project will acquire
two concessions in the Ogaden basin in southern Ethiopia where four
trillion cubic feet of gas and 13.6 million barrels of associated
liquids were discovered by Tenneco in the 1970s.
The joint venture will also acquire 95 percent of the Calub Gas Share
Co. from Ethiopia under privatization laws. The joint venture will pay
the Ethiopian government $111 million for the gas company, which has
carried out all the exploration and development work in the project area
to date. Under the new name Gazoil Ethiopia Share Company, it will be
expanded to take over all production work for the project.
The pipeline will transmit gas and other liquids to the town of Awash,
75 miles east of the capital city, Addis Ababa. At Awash plans call for
construction of a cryogenic liquids plant and two gas-to-liquids process
systems with capacity to process 200 million cubic feet of natural gas
per day. The end products will be synthetic fuels and petrochemical
feedstocks plus steam that will generate electricity and potable water.
A planned refinery will produce products including diesel, gasoline,
kerosene and jet fuels. The gas-to-liquids system will also produce some
500 tons of ammonia per day as feedstock for a urea plant to be
Sicor will begin the pre-development phase of the project in late
February, says Monk. It is expected to be completely on stream by Sept.
Monk's previous partnership did pre-development studies for the Attacama
Project in South America, a 450-mile pipeline from Argentina over the
Andes Mountains to northern Chile. The project was ultimately sold to
CMS Energy in Michigan.
Now, Monk says, Sicor is doing strictly gas-to-liquids projects which
the company develops and owns. Sicor operates only in the Arabian Gulf
and sub-Sahara Africa, where it has six other projects under
consideration. Monk says he expects to sign an agreement on a project in
Yemen after the first of the year.
Ethiopia Signs $1.4 Billion Deal With U.S.
Reuters; December 9, 1999
ADDIS ABABA (Reuters) - Ethiopia said on
Wednesday it had signed a $1.4 billion joint venture deal with U.S. firm
Sicor to develop a huge gas field in the east of the country and build a
pipeline and processing units.
The joint venture, Gasoil Ethiopia Project (GEP), will develop fields in
the Ogaden basin where four trillion cubic feet of gas and 13.6 million
barrels of associated liquids were discovered in the 1970s, government
spokesman Haile Kiros told Reuters.
The Ethiopian government will hold a 20 percent stake in the joint
venture and Sicor, based in Houston, Texas, the remainder.
Details of financing were not given. GEP plans to construct a 375-mile,
24-inch gas pipeline to transmit gas to the town of Awash, around 75
miles east of the capital Addis Ababa, on the country's main railway
line and highway.
Haile said the joint venture will construct a cryogenic liquid plant to
strip mostly liquefied petroleum gas (propane and butane) and condensate
from the gas, as well as two gas-to-liquid systems to process dry gas.
The plant would process a total of two billion cubic feet of gas a day
into 20,000 bpd of fuel and petrochemical feedstocks. Waste steam would
fuel a 168 megawatt power plant, he said.
The joint venture is expected to start 12 months of pre-development work
in February with production slated to start in 2002.
Haile said the agreement was hugely important for Ethiopia, where the
felling of trees for fuel has caused major deforestation.
The ammonia by-product from gas processing would make Ethiopia a net
exporter of fertilizers for the first time, Haile said.
A Second Wind For Calub Gas
The International Oil & Gas Newspaper
Vol 4, Week 5, 5th February 1999
Barry Morgan from ACCRA
Interest is slowly reviving in Ethiopia�s
Calub gas project after the country's Privatization Agency previously
dashed hopes by withdrawing four bids submitted for the development of
the onshore field, which contains an estimated 2.71 trillion cubic feet.
One of the four, Santa Fe Energy has renewed contract with the energy
ministry, a department source said.
The principal reasons for refusing the bids from Santa Fe, Mapple,
Knorex and Midroc was their "failure to fully comply with requirements"
enabling the government to recover the $97 million it invested in
phase-1 of Calub, located on block OG-1.
Two companies from the Middle East and the US have also shown interest
and the agency "is now ready to accept new and revised offers", the
source said. "Whether we accept the recovery of less than the full
project cost will depend on the investment plan submitted."
The World Bank has earmarked an additional $74 million for the project,
which aims to convert gas from the Ogaden basin into power, fertilizers
and sundry industrial feedstock for export. The ministry also wants to
explore the Hilale find some 80-km northwest of Calub.
Volume 3, issue
#2 - Tuesday, February 02, 1999
Ethiopia withdraws bid for sale of gas company
20-12-98 The Ministry of Mines and Energy of Ethiopia announced the
government's decision to reject the bid for the privatisation of the Kalub
Gas Share Company.
The Ministry said that the Ethiopian government has decided to withdraw
the bid for the sale of its stake in the company because it found the
bid results unsatisfactory.
The Ministry said the prices quoted and the terms stated by the bidders
who include four international companies are not commensurate with those
stipulated in the bid document.
The Ethiopian Privatisation Agency invited bids earlier this year for
selling off the government's stake in the company. Four international
companies including an American company have bidden for the
competition. However, the prices gave by the four companies were
unsatisfactory to the Ethiopian government.
The Kalub Gas Share Company, established in accordance with the
Ethiopian law, aims at tapping the natural gas resources found in
the Ogaden area.
According to the Ministry, a study hasconfirmed the availability in
the area locally known as Kalub of 68 bn cm of natural gas and a loan of
over $ 74 mm has been obtained from the World Bank for the natural gas
The Ministry said, the Ethiopian Privatisation Agency has been taking
measures to sell off government's stake in the company, but added that
now the company will continue in its present entity.
Inventory of fossil fuel extraction
projects financed by World Bank Group,
mid-1992 to 1997
Type of Industry:
Natural gas field development
Calub gas development
Calub natural gas deposit, Ogaden Basin, Ethiopia
Owner of Project:
Calub Gas Share Company (state-run)
G-7 TNC Involvement:
Parsons Corp. (U.S., awarded $50 million contract for construction of
gas processing plant)
World Bank Agency:
Amount of Financing (estimated total cost):
$74.3 million of $130.8 million, with cofinancing from African
Development Bank ($27 million) and the Netherlands ($4 million).
Year of Approval:
Calub holds an estimated 74 billion cubic meters (2.6 TCF) of natural
World Bank Description:
"By increasing the availability of fuel from the Calub natural gas
deposit in the country's southeast region, Ethiopia's unbalanced
structure of energy supply will be partially righted and the supply of
petroleum products needed in the modern sectors of the economy
increased. Road rehabilitation, technical assistance, and a
poverty-alleviation component -- aimed at supporting income
diversification among poor urban fuelwood carriers --is included."
(World Bank Annual Report FY 1994)
This is Ethiopia's first natural gas field development. Construction is
to start in 1997 and be completed in 1998. Parsons called the project
"a starting point for Ethiopia's long-term development of fossil-fuel
resources." (Business Wire, Feb. 6, 1996; Xinhua, Feb. 23, 1997; Oil
& Gas Journal, Feb. 12, 1996; Africa News, Feb. 26, 1997;
ESP-Business Opportunities in Africa & the Middle East April 1,
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