Insecurity Said Hampering Foreign Oil Firms in Ethiopia’s Ogaden Region

Text of report by Ethiopian weekly newspaper The Reporter on 20 October

Petroleum companies which have oil exploration concessions in the Ogaden [in southeastern Ethiopia] basin are unable to resume work on the exploration projects due to fragile security conditions in the remote eastern part of Ethiopia.

Petronas, South West Energy, Pexco and Lundin Petroleum posses exploration blocks in the Ogaden basin.

Petronas and South West Energy had been conducting seismic survey in their exploration blocks until April 2007.

The Chinese petroleum company, Zhoungyan Petroleum Exploration Bureau (ZPEB), contracted by both Petronas and South West Energy, was undertaking the seismic survey.

Following the Ogaden National Liberation Front (ONLF) attack on the exploration site in Degeh Bur Zone last April, killing 74 people, including nine Chinese oil workers, ZPEB suspended work on the exploration projects of Petronas and South West Energy.

The Ethiopian Ministry of Mines and Energy (MME) has been pressing all the petroleum companies to start work on the projects. However, ZPEB was unable to resume the exploration activity as it did not get green light from its parent company Sino Tech.

After the rebels” attack, executives of Sino Tech conferred with Ethiopian authorities. The executives told the Ethiopian authorities that they wanted to resume work on the exploration projects. However, they have not yet given the green light to ZPEB to commence work on the projects. Petronas and South West Energy recently explained the situation to senior officials of MME and asked to be given more time to revamp the oil exploration projects.

Pexco was prepared to begin airborne gravity and magnetic surveys last June. However, after the rebels” attack, the South African company Fugro, which was contracted by Pexco to conduct the airborne gravity and magnetic surveys, refused to do the job for security reasons.

Reliable sources with MME told The Reporter that representatives of Petronas, South West Energy and Pexco have expressed their firm commitments to engage in the exploration projects.

“They do not want to terminate the projects. But at the moment it is difficult for them to find a sub-contractor which is willing to work in that region,” the sources said.

“They are just asking for more time,” they added.

Meanwhile, the Swedish oil firm Lundin Petroleum is planning to embark on oil exploration work. Lundin Petroleum is prepared to begin airborne survey in its exploration area near Dire Dawa [in eastern Ethiopia] town.

Following the rebels” attack, the Ethiopian national defence forces launched an offensive on the rebel group. Ethiopian authorities have vowed to ensure peace and stability in the Ogaden region.

Originally published by The Reporter, Addis Ababa, in Amharic 20 Oct 07.

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