Addis Fortune (Addis Ababa)

Ethiopia: Brazilian Petrol Firm Proposes Concessions

Photo: Gijs van ‘t Klooster/FAO
Ogaden region

Petra Energyia, a Brazil-based petroleum company, has submitted a proposal for a concession in the Ogaden and Abay basins, sources disclosed to Fortune.

The privately owned company headquartered in Rio de Janeiro is primarily operating in South America. It operates within seven onshore exploratory blocks in Parnaiba Basin, located in northeast Brazil, a concession of 680,000sqkm.

Although the blocks in Ethiopia that the company has proposed as a concession are undisclosed, sources at the Ministry of Mines (MoM) said that its proposals are being evaluated by experts in the Petroleum Licensing & Administration Section of the MoM.

The Abay Basin, which covers an area of 63,000sqkm in the central north-western plateau of Ethiopia spanning Amhara and Oromia regional states, shares the same geo-tectonic origin as the Ogaden Basin, in Somali Regional State. It has nine blocks, three of which are already under exploration by Falcon Petroleum Ltd. The rest of the blocks are still open.

The Ogaden Basin, a 350,000sqkm area located in south-eastern Ethiopia, is the largest Basin in Ethiopia. Natural gas has been discovered at Calub and Hilala in the Ogaden, with estimated reserves of 84.9 billion cubic metres at its centre.

It has a total of 22 blocks, of which the government awarded eight blocks, including the two gas fields, to the China-based oil and gas company, PetroTrans, in July 2011.

Indigenous oil company SouthWest Energy also has blocks Nine, Nine A, and 13. These are the blocks that Petronas, a Malaysian oil giant that left the country after investing 350 million dollars, regarded as potentially having oil reserves.

Netherlands-based Pexco Exploration also has four blocks in the Basin. Canadian giant Africa Oil has blocks Seven and Eight.

Since Africa Oil relinquished blocks Two and Six in the Basin five months ago, after paying compensation to the government, the vacant blocks in the Basin have increased to five.

Including the relinquished ones, the remaining open blocks in the Basin are One, Five, and 10.

The Ministry gives the open blocks to companies by negotiation upon approval by the Council of Ministers, without floating a tender, as long as other companies do not show an interest. When there are many companies, the Ministry floats a tender, according to Ministry officials.

Experts evaluate each company's capacity to undertake exploration activities, including financial and human resource capacities. If the ministry is convinced of the adequateness of a company's proposal, it will sit for negotiations, according to sources.

The Ministry generated 16.2 million dollars in the 2011/12 fiscal year from investments in petroleum, five times the plan to generate 3.2 million dollars, according to the Ministry.

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