12 December 2007
Addis Abeba — Malaysia's Petronas [PETR.UL] and China's Sinopec are negotiating with the Ethiopian government on the resumption of oil and gas prospecting in the Ogaden region,a news agency reported on Monday citing a senior official with the ministry of mines and energy.
Exploration in the remote area halted after separatist rebels killed 74 people, including nine Chinese employees of Zhongyuan Petroleum Exploration Bureau , part of Sinopec, China's biggest refiner and petrochemicals producer.
According to the report, the government believes situations in the volitile region have now improved and the copmanies could resume operation there.
"We hope the two sides will reach an agreement and resume exploration work in the Ogaden because the situation has changed and there is no security threat now," Reuters quoted Sinknesh Ejigu, state minister for mines and energy as saying.
The State Minister told the news agency that ZPEB exploration equipment was sitting idle at the site of the April 24 guerrilla attack near Degabur, 630 km east of the capital Addis Ababa.
The pre-dawn raid by Ogaden National Liberation Front rebels was one of the worst on Beijing's growing energy interests in Africa, prompting a major military crackdown by the Ethiopian army that began in June.
In September, the government said the violence had not deterred Sinopec, and that the Chinese company had expressed renewed interest in negotiating energy production-sharing deals.
The government believes the Ogaden basin, which covers 350,000 sq km , contains gas reserves of some 4 trillion cubic feet.
It has assured firms operating in the vast, barren area bordering Somalia that security has been stepped up.
An Ethiopian official said in August that the country had signed a deal allowing Malaysian state company Petronas [PETR.UL] to develop natural gas in the Ogaden region.
Sinknesh said on Monday that Sweden's Lundin had started surveying four Ogaden blocks, while PEXCO -- another Malaysian firm -- was about to begin exploration
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