The Ministry of Mines (MoM) and Africa Oil Corporation, a Canadian oil gas company with assets in Kenya, Ethiopia and Mali, signed a Petroleum Production Sharing Agreement last week.

The exploration and production of oil covers 42,000 square kilometres in Omo Region and 50,000square kilometres in Ogaden Region.

Africa Oil entered into a contract for a joint study with the MoM to study the Rift Valley Block, which spans 42,519 square kilometres, at a cost of 125,000 dollars, on November, 2010.

Africa Oil currently has a total of four projects in Ethiopia, specifically in the Ogaden Basin, which contains two blocks in eastern Ethiopia. The company has Adigala Block, close to the border with Somalia and Djibouti and the Rift Valley block in South-western Ethiopia.

Three years ago, Africa Oil also agreed with Tullo Petroleum and White Nile Petroleum, both United Kingdom based companies, to explore the South Omo Valley block. Tullo Petroleum was the operator, by virtue of having the largest share.