Wednesday, August 26, 2009

Malaysian oil and gas giant Petronas to drill in Ogaden

July 27th, 2009

Addis Ababa (The Reporter) — The Malaysian oil and gas giant, Petronas, is to start drilling the first exploration well in the Ogaden basin.

Petronas will soon start drilling two wells in its concession area in the Genele block. The company has hired a Dubai based company, Weather Ford, which will conduct seismic survey and drill the exploration wells. Recently, Weather Ford started mobilizing its drilling crew, drilling rigs and machines for conducting seismic surveys in the region.

Reliable sources told The Reporter that Weather Ford has agreed to drill exploration wells in the Genale block, block 11 and 15. Sources said Weather Ford is mobilizing its crew and drilling rigs. Weather Ford is engaged in oil and gas exploration work in the Middle East. Petronas conducted various surveys in the Ogaden. However, it did not drill wells.

In 2004 Zhongyuan Petroleum Exploration Bureau (ZPEB), a Chinese company, was contracted by Petronas to do seismic survey and drill exploration wells in the Gambella block owned by Petronas. Petronas acquired the Gambella block, covering about 16,000 sq. km of land, in June 2003. ZPEB collected seismic data on 1500 km. Accordingly, in 2005 ZPEB drilled the first wild cat well in Jikaw locality, only 175 km from the Ethio-Sudan border. The company drilled the second well in Jakaranda locality in 2006. Both wells were dry. Petronas spent 32 million dollars for the drillings and testing. ZPEB withdrew from Gambella after it finalized its work in 2006.

However, the same year, Petronas hired ZPEB to conduct seismic survey in the Ogaden basin. In July 2005, Petronas acquired three blocks in the Ogaden basin – Genale block (24,420 Sq km, Kallafo 30,612 sq.km and Welwel-Warder 36,796 sq.km). In 2006, ZPEB started collecting seismic data in the three blocks.

In October 2006 South West Energy hired ZPEB to do seismic survey in the Ogaden basin. In December 2005, South West Energy, a company owned by an Ethiopian businessman, acquired a Degehabur block covering 21,187 sq. km of land. In January 2007, ZPEB commenced collecting seismic data in the Degehabur block. On 24 Apil 2007 the Ogaden National Liberation Front (ONLF) attacked the Abole exploration site in the Degehabur zone of the Somali Regional State. Seventy-four civilians, including nine Chinese, were killed in the attack. Seven Chinese workers were abducted by ONLF fighters. However, they were released after two weeks. Following the attack in May 2007, ZPEB evacuated all its employees working in Ethiopia. Although the Ethiopian government tried hard to convince officials of ZPEB and SINOPEC to resume operations the companies declined to send their technicians back to Ogaden. ZPEB had terminated all the projects in Ethiopia.

It is to be recalled that Petronas agreed to develop the Callub and Hillala gas fields and paid the Ethiopian government 80 million dollars. The agreement was signed in 2007. However, the company has not started work on the project. Sources told The Reporter that it was related to security issues. Petronas had a plan to build a gas treatment plant. The company planned to construct a gas pipeline that stareches from the gas fields all the way to Djibouti. The total investment cost is estimated at 1.9 billion dollars.

A senior company official said the natural gas reserve in Calub and Hilala was estimated at 118 billion cu.m. adding that it was a small reserve compared to other reserves. It requires a lot of money to develop the natural gas. So the company is saying that it must discover additional reserves and build a gas treatment plant,” the official said.

In a related news, Pexco, a company based in Malaysia, started seismic survey in its concession in the Ogaden. White Nile, Lundin, South West Energy, and Afar Explorations are in the process of starting seismic survey in their concession areas. Pexco has conducted airborne magnetic and gravity survey in the Ogaden basin. The results of the magnetic and gravity survey were evaluated by the ministry.