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Maersk, Africa Oil complete farmout agreement in Ethiopia
Tolossa Shagi

Maersk, Africa Oil complete farmout agreement in Ethiopia

Ministry yet to approve the transaction

Africa Oil and Maersk Oil and Gas have concluded a farmout deal in two oil exploration blocks in Southern Ethiopia.

In November 2015 Africa Oil agreed to sell 50 percent of its stake on two blocks in Southern Ethiopia to Maersk Oil and Gas, a Danish oil and gas company owned by the giant Maersk Group. Africa Oil is a Canadian Oil company with assets in Ethiopia and Kenya. The company owns 50 percent stake the Rift basin and 30 percent stake on the South Omo block. According to the new agreement, Maersk will acquire 25 percent stake on Africa Oil’s concession in the Rift Basin and 15 percent on South Omo basin.

In a statement issued on February 23, 2016 Africa Oil stated that the farmout agreement has been completed. Up on the completion of the agreement Africa Oil received a payment of 12.8 million dollars from Maersk Oil and Gas for the stake acquisition.  

Keith Hill, Africa Oil’s CEO said, “We are very pleased to have completed our farmout to Maersk

Oil. We feel Maersk Oil will be an excellent partner in terms of technical and financial strength.”

Africa Oil has 50 percent stake on Rift Basin and Marathon Oil, a US oil company, owns the remaining shares. On the South Omo basin the operator, Tullow Oil, has 50 percent stake, Africa Oil has 30 percent and Marathon Oil owns the remaining 20 percent shares.

The Minister of Mines, Petroleum and Natural Gas, Tolossa Shagi, told The Reporterthat he is aware that Africa Oil and Maersk Oil have sealed a farmout deal. Tolossa said the companies would request for formal approval from the ministry to endorse the farmout agreement. “We will reveal the details of the agreement when the agreement is endorsed,” he added.

In addition to Ethiopia’s Rift Basin and South Omo basin, Maersk will acquire 50 percent of Africa Oil's interests in three Blocks in Kenya. In consideration for reimbursement of a portion of Africa Oil's past costs and a future carry on certain exploration and development costs, Maersk will pay Africa Oil 350 million dollars.

Africa Oil is a Canadian company based in Vancouver. The company has four projects in Ethiopia consisting of blocks 7 & 8 in the Ogaden Basin of eastern Ethiopia, the Adigala Block close to the border with Somalia and Djibouti, the South Omo Block which lies in the Omo Rift Valley of south-western Ethiopia and the Rift Basin, near Arba Minch.

Currently, eight international oil companies – Africa Oil, Tullow Oil, Falcon Petroleum, South West Energy, New Age, Poly GCL, GBP Global Resources and Delonex Energy – are engaged in oil and gas exploration activities in various parts of Ethiopia.