• Wednesday, 16 May, 2012

Oil on hold as borders burn

-

 05 July 2001 19:45 GMT

Ethiopia's search for oil and gas reserves is complicating a conflict already dogged by the intricate politics of clan and ethnicity. Last month saw hundreds of Ethiopian troops cross the Somalian border into war-torn territory claimed by Mogadishu's Transitional National Government but run by dissident warlords allied to Addis Ababa.

The so-called "Ogaden" Region-V is inhabited by Somalis that the ethnic Tigrayan regime in Addis Ababa is keen to see disengage from constructive dialogue with their kin over the border.

For now, Ethiopian Somalis get a better deal from Addis Ababa but that could change if fully-proven hydrocarbon wealth is unearthed to fuel independent thinking.

Ten years after the military dictatorship of Haile Mariam Mengistu was deposed, the elected government of Meles Zenawi is disintegrating into camps reflecting the interests of ethnic Oromo, Amhara and others. Keeping his domestic Somali allies sweet is therefore a priority for Meles and that means easing up on the Calub gas field development, sources insist.

Officials deny that regional politics have slowed down Calub, insisting that Texan infrastructure developer Sicor is to blame for not coming up with the "preliminary investments" needed to make the project fly. "It already looks dead -- no money has come forward -- and the Ethiopian Privatisation Agency is still waiting," says one. Beijing-based Zhongyang Petroleum Exploration Bureau was involved in early Calub development drilling but no further progress has been made with Sicor since the latter signed a clandestine memorandum of understanding with the Council of Ministers almost two years ago.

No inter-agency consultation over the deal took place and there have been no talks with either the Public Enterprise Supervising Agency or the Ministry of Mines and Energy's Petroleum Operations Department.

Even the general manager of the Calub Gas Company claims not be familiar with the deal and its divestment was never formally listed.

Meanwhile, Sicor trumpeted its upcoming $1.4 billion joint venture to process 2 billion cubic feet per day of gas, dubbed the Gasoil Ethiopia Project, and lay 600 kilometres of 24-inch pipeline to Awash, located 120 kilometres east of the capital.

A 12-month programme to separate dry gas was slated to kick off in February, with production startup next year. "Sicor appears to be weaker than we first thought," said another policy insider.

Previously, disappointed hopefuls included fellow Houston outfits TDC Energy and Santa Fe Energy.

Operations chief Abi Hunignaw says Calub is the only committed acreage with everything else open for bids.

Hunt relinquished its Genale River block last year after one probe targeting the same Calub sandstone was drilled in the wrong location way left of the basement structure. "We still have no full picture of what's down there -- it was a disappointing setback," says Hunignaw.

East of Genale and by the Kenyan border is the Hilala oil and gas play.

It is only 80 kilometres west of the Calub system where two discovery wells suggested deep gas-condensate reservoirs underlay much shallower 30-degree API oil deposits, says Hunignaw. Elsewhere, officials are touting prospects on the western border with Sudan. The newly released Gambela licence from which Vancouver's Pinewood Resources was ejected on 8 May for failure to meet financial obligations.

One North American and another US/Caribbean company are well past the application stage for Gambela acreage and an award is expected imminently, says Hunignaw. Interest in Gambela has been spurred by publicity highlighting Sudan's successful desert probes over the border at Adar Yale whose structure's southern tip extends into Ethiopia "and which will produce soon".

However, observers worry that as the civil conflict in Sudan heats up any possible Gambela development would fall foul of the same kind of instability that has dogged Calub on the Somali marches to the east.

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