20 January 2013

Ethiopia: Tullow to Announce Oil Test Results

Photo: Msia Kibowa Clark/AllAfrica
Addis Ababa, Ethiopia.

Tullow Oil Plc, the oil and gas explorer based in the United Kingdom, will announce in three months the results of the geological test drills it started last Sunday, January 13, 2013, on its concession in South Omo.

Drilling will take place, up to 2,600m deep, to test the oil potential, after which a decision will be made whether or not to continue drilling, according to a Tullow official.

If the results turn out to be positive, the company could dig 12 more holes, in order to determine the quantity of oil that could potentially be extracted.

"Drilling is a very complicated process and it is difficult to predict whether there is oil or not before conducting the drilling test," Sisay Zerihun, corporate manager of Tullow oil Ethiopia told Fortune. "As the state minister [of Mines] said before, we shall cross our fingers and pray."

However, previously, senior managers of Tullow informed higher Ethiopian government officials that the area was rich in oil reserves; perhaps even larger than those discovered in Kenya and Uganda.

"There is also a similar result on the seismic survey conducted in the neighbouring countries;KenyaandUganda," says Sisay.

According to him, Kenya's drilling proved to be fruitful at 1200m. The drilling conducted in Kenya last year resulted in the discovery of 1.1 billion barrels of oil for the company.

Tullow conducted 18 months of seismic operations, on 18,000sqkm of land, before commencing with drilling operations. The Full Tensor Gradiometric Gravity survey and collection of seismic data, in the area, was conducted by the Chinese, BGP Geo Service Plc.

Tullow, which is headquartered inLondon, has concession rights in 23 countries, including three African countries;Ghana,KenyaandUganda. Its recent drilling activities in the two neighbouring countries were successful. In 2010, Tullow Oil bought a 50pc exploration stake inSouthOmoValleyfrom Africa Oil.

There are five areas in Ethiopia that are said to have a promising oil deposits, according to the Ministry of Mines (MoM), some of which have received more attention in recent years. Two of the areas, the Omo basin and the Chew Bahir basin, lie within the Rift Valley.

The Abay basin, on the other hand, covers a large area over the central north-western plateau, spanning Amhara and Oromia regional states, whilst sharing the same geo-tectonic origin as the Ogaden basin in the Somali Regional state. The basin is split up into nine blocks, three of which are already under exploration by Falcon Petroleum Ltd.

Of the five areas, the Ogaden basin, 350,000 sq km, is located in south-eastern Ethiopia and is the largest basin in the country. Natural gas has been discovered at Calub and Hilala, in the Ogaden, with estimated reserves of 84.9 billion cubic metres.

Mekele basin covers an area of about 8,000sqkm in the northern part of the country. The Gambella basin is the south-eastern extension of the Melut basin, where two oil discoveries (Adar and Yale, Sudan) have been made.

Petronas, a Malaysian oil giant, was the first to dig wells in search of oil in Ethiopia, in Gambella Regional State. Oil was not found in any of the wells, before Petronas's departure from Ethiopia, in January 2011. It conducted a geological survey in the area, but left before conducting any seismic study.

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