Oil companies to take new concessions
Following the removal of the National Bank of Ethiopia’s directive that compels oil and gas companies to open a foreign bank account in Ethiopia international oil companies have shown interest to take new concessions.
A directive issued by the National Bank of Ethiopia (NBE), which requires foreign oil companies engaged in oil and gas exploration and development projects in Ethiopia to open a foreign currency bank account in Ethiopia, has been a stumbling block to investments in the oil and gas exploration and development sector. Companies engaged in the oil and gas exploration and development projects have suspended their investment projects due to the restrictive directive. Even those who were negotiating with the Ministry of Mines and Petroleum to take new concessions have halted the negotiations.
After a repeated appeal by the oil companies and the Ministry of Mines and Petroleum, Prime Minister Abiy Ahmed (PhD) recently scrapped the directive that forces the companies to keep a foreign currency bank account in Ethiopia.
Poly GCL Petroleum Investments, Africa Oil, New Age, Delonex Energy, Gazprom and South West Energy are the international companies engaged in oil and gas exploration and development projects in Ethiopia. All the oil companies had suspended their operations due to the directive.
A senior official at the Ministry of Mines and Petroleum told The Reporter that after Prime Minister Abiy Ahmed took a bold measure to allow the oil and gas companies to have off shore account, the international oil companies have resumed work on their projects. The official said international oil companies have shown interest to take new oil exploration concessions.
A British oil firm, Delonex Energy, which has been negotiating to take over two exploration blocks in the Ogaden basin, had suspended the process due to the NBE’s directive. Delonex proposed to take over block 10 and 14 in the Ogaden basin. After a series of negotiations, the Ministry of Mines and Petroleum have accepted the proposal and remanded the petroleum production sharing agreement to the Council of Ministers. Accordingly, the Council of Ministers approved the production sharing agreement. However, Delonex had put on hold the process due to NBE’s directive.
A senior official of the Ministry of Mines and Petroleum told The Reporter that since the stumbling block has been removed Delonex and the Ministry would soon sign the production sharing agreement. The official said another international oil company is also negotiating with the Ministry to sign a petroleum exploration and development agreement. “More companies are now showing interest to take new concessions. We have also prepared open exploration blocks not only in the Ogaden but also in other parts of the country,” he said. “The removal of the NBE’s directive has resurrected the oil and gas sector which was in a standstill for quite sometime,” he added.
The British energy firm New Age (African Global Energy Ltd.) has discovered 1.6 Trillion Cubic Feet of natural gas reserve in the Ogaden basin, in a locality called Elkuran. The company in collaboration with the Ministry of Mines and Petroleum is working on the commercialization of the gas reserve. “New Age has also been requesting the government to amend NBE’s directive,” a source told The Reporter.
Poly GCL Petroleum Investments, the Chinese company which signed petroleum development and production sharing agreements with the Ministry of Mines in 2013 is in the process to extract a natural gas reserve in the Oganden basin. According to the Ministry of Mines and Petroleum, Poly GCL is in the process to develop a 4.7 TCF of gas which was discovered in 1972 in Calub and Hilala localities. Poly GCL has undertaken exploration work and discovered additional gas reserve in a locality called Dohar. As a result the volume of the gas reserve has increased to 6-8 TCF. But the company is now working to extract the 4.7 TCF gas.
The gas produced from Calub and Hilala gas fields would be transported by a 760 km gas pipeline to a gas treatment plant to be built at the Port of Djibouti. The Chinese firm plans to change the gas into Liquid Natural Gas (LNG) at the gas treatment plant and export it to China. Poly GCL hopes to start pumping out the gas by 2021.
A source told The Reporter that Poly GCL which was discouraged by NBE’s directive is now reactivating the gas development project.