By William
Davison, BusinessWeek
SouthWest Energy, an Ethiopian oil- exploration company, said it’s optimistic about the results of a seismic survey in the Ogaden basin and has met oil majors to discuss a possible partnership in the Horn of Africa country.
Infrastructure needed for production, which would start at least four years after any discovery, may cost as much as $3 billion, according to Tewodros. “That can only be done by the big boys,” he said, without providing further details.
SouthWest Energy, an Ethiopian oil- exploration company, said it’s optimistic about the results of a seismic survey in the Ogaden basin and has met oil majors to discuss a possible partnership in the Horn of Africa country.
The initial
findings from the survey completed in February are “very encouraging,” Chairman
Tewodros Ashenafi said in an interview on May 7 in the capital, Addis Ababa.
“Discovery could very well possibly happen next year.”
Infrastructure needed for production, which would start at least four years after any discovery, may cost as much as $3 billion, according to Tewodros. “That can only be done by the big boys,” he said, without providing further details.
No oil has been
found in Ethiopia, which relies on exports of coffee and other agricultural
commodities to generate most of its foreign-exchange earnings. The
Somalia-bordering Ogaden region, where PetroTrans Co. of Hong Kong operates the
Calub and Hilala fields, has 4 trillion cubic feet (113 billion cubic meters)
of natural gas, said Tewodros, who is in the Ethiopian capital to attend the
World Economic Forum on Africa that begins today.
Tullow Oil Plc
(TLW), based in London, and Canada’s Africa Oil Corp., in March announced they
struck oil in Turkana, a northern region in neighboring Kenya. The companies
hired China’s BGP Inc. to survey similar terrain across the border in
Ethiopia’s South Omo Block.
SouthWest, based
in Addis Ababa and registered in Hong Kong, is also prospecting in Ethiopia’s
southwestern Gambella region. The 17,000 square-kilometer (6,564 square-miles)
concession is “exactly the same” as South Sudan’s oil-rich Muglad Basin, said
Tewodros. Muglad contains an estimated 6 billion barrels of oil in place,
according to a 2010 report by FirstEnergy Capital Corp. in Calgary, Canada.
Billions of
Barrels
“I think two to
three billion barrels of proven reserves is not something that is unreasonable”
for the sites being prospected in the Ogaden, Omo and Gambella, he said.
The company has
invested about $50 million in Ogaden blocks 9, 9A and 13, which cover 29,000
square kilometers, and plans to commit a further $150 million over the next
three years, Tewodros said. Drilling is expected to start in the first quarter
of next year, he said.
The banned
Ogaden National Liberation Front has waged a 28- year campaign for
self-determination in the Ogaden, which is populated mainly by ethnic Somalis.
In September, the rebel fighters said they attacked a PetroTrans convoy, while
the company denied the incident. In April 2007, the rebel group attacked an
exploration site operated by China’s Zhongyuan Petroleum Exploration Bureau,
killing nine Chinese workers and 65 Ethiopians.
‘Challenges’
While security
“challenges” exist, SouthWest spent 1 million man hours during eight months of
surveying without “a single major accident or injury,” Tewodros said.
Oil produced in
the Ogaden would probably be exported via a pipeline to the coast of
Somaliland, an autonomous northern region of Somalia, which is as close as 120
kilometers (75 miles) from the blocks, he said.
Ogaden oil may
be light in sulfur and “easier to refine,” while Gambella’s could be “waxy” and
need chemicals “to have it flow,” according to Tewodros.
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