Briefing on the coming five-year plan of the Ministry to employees, Sinkinesh Ejigu, Minister of Mines, noted that the government of Ethiopia has concluded negotiations with Petronas officials with mutual understanding and retained back all the five blocks that the company was exploring.
In October 2010, it was reported that Petronas has decided to transfer its exploration activity in Ethiopia to a US based company, SouthWest. “We have agreed with Petronas officials amicably that there will be no transfer and based on our agreement all the five blocks are now in the hands of Ethiopian government,” the Minister said, responding to newbusinessethiopia.com reporter at the press briefing session following her meeting with the employees last Thursday (February 17, 2011).
“Now we are planning to auction the blocks for other international oil exploration companies,” said, Sinkinesh refused to go into the details on how the deal was concluded with Petronas. According to the minister, government is very much strict and will do all the due diligence on the potentials of the companies before awarding the exploration sites-
Her ministry makes sure that the companies to who it will award the sites, ‘are not brokers who plan to transfer the explorations sites to a third party’, according to the minister who commends Petronas for the infrastructures it has built in Ethiopia over the past years investing hundreds of millions of US dollars.
“We are very much grateful for what Petronas have done in Ethiopia and we respect their decision. We hope to see the company investing in other business streams in Ethiopia in the future,” she said.
Petronas, which decided to quit its oil exploration activity in Ethiopia after spending over 350 million US dollars in the past seven years did not mentioned why it has decided to quit exploration.
Petronas Carigali Overseas Operations (PCOSB) has been in operation in Ethiopia since 2003. Six Petroleum Production Sharing Agreements (PPSA) - five explorations and one development were signed between the Malaysian company and the Government of Ethiopia.
The PPSA covers two distinct regions namely Gambella, which is located in the western part of the country Sudan border and Ogaden Basins. Meanwhile a few years ago, the company has concluded its exploration in Gambella region indicating that there is no oil.
In the eastern part of the country, Ogaden, the company has been working on eight exploration blocks and two development fields until the management finally decided to stop exploration and withdraw from the country.
Now all exploration blocks found in the Ogaden Basin: the Ethiopian government takes 3 & 4, 11 & 15, 12 & 16, 17 & 20 and the Calub & Hilala contract area back. The blocks are proven hydrocarbon bearing sedimentary basin in Ethiopia, with proven gas reserves of 2-4 trillion cubic feet.