Calub Hilala Fields

Introduction


The Ogaden basin is located in the southeastern region of Ethiopia and occupies an area of 350,000 square kilometers. The basin is characterized by deep, asymmetrical grabens separated by internal highs. The sedimentary succession reaches a thickness of 10,000 meters in the deeper parts and is comprised of non marine to deep marine clastics, very thick, shallow-to-deep marine carbonates and evaporites. Petroleum exploration activities in the basin were carried out by a number of international companies during the last 37 years. From 1955-1991, 46 wells have been drilled with numerous hydrocarbon shows and two gas/condensate discoveries, Calub and Hilala.

The Calub and Hilala Gas Fields were discovered by Tenneco in 1973, and 1974 respectively. The Soviet Petroleum Exploration Expedition (SPEE) drilled nine development wells at Calub and three wells at Hilala during the period 1986 to 1991.

Gas at Calub is trapped on the upthrown side of a NW-trending normal fault with 80 m downward displacement to the northeast. Gas/condensate was discovered at two levels: Permo-Triassic pre-rift Calub formation sandstones with an average porosity of 12 % and an average net pay thickness of 20.5 m. Average Sw is 31%. DST in the discovery well flowed gas at a rate of 691,935 m3/day (24.4 mmcf/day) and recovered 0.05 m3 of 51 API condensate.

Lower Jurassic Adigrat Formation sandstones is the second target with an average porosity of 11% and average net pay thickness of 17.0 m. Average water saturation is 25%. DST in the discovery well flowed gas at a rate of 481389 m3/day (17.0 mmcf/day) and recovered 0.05 m3 of 51 API condensate.

Initial gas in place at Calub is estimated to be 2.7 TCF and the initial recoverable condensate reserves are about 128 million barrels (SPEE, 1993). Published gas in place volumes at Hilala is 1.3 TCF.


 

Historical and Current Attempts to Develop the  Calub Gas Discovery in the Ogaden Region of Ethiopia - (1992-2018) [scroll down for more detail]
    • This Country Just Started Pumping Oil For The First Time Ever June 28, 2018
    • Chinese company strikes oil, additional gas reserve (March 2018)
    • Chinese firm begins drilling 6th petroleum, natural gas well in Ethiopian Somali regional state (January 11, 2017)
    • Ministry moves gas development project forward (Aug 6, 2016)
    • China's POLY-GCL completes gas appraisal wells in southeast Ethiopia (Jan 1, 2016)
    • Ethiopia eyes gas production, exports by 2017 - PM (March 27, 2015)
    • Chinese company plans to produce gas by 2018  (Oct 2014)
    • Ethiopia: Ministry of Mines Signs Agreement With Chinese Firm for Ogaden Gas Reserves (Dec. 2013)
    • Ethiopia Revokes PetroTrans Accord Over Lack of Investment (July 2012)
    • Petro Trans to Conduct Survey on Ethiopian Gas Fields (April 2012)
    • Will PetroTrans succeed where others failed? (March 2012)
    • Ethiopia Awards Ogaden Gas Fields to Chinese Company  (July 2011)
    • Petronas Sells Ethiopian assets to SouthWest (October, 06, 2010)
    • Ethiopia: Petronas Pays 80 Million Dollars for Gasfields (22 September 2007)
    • Ministry to Revoke SIL's Petroleum Development License (January 14, 2006)
    • SIL to invest 1.5 billion USD in the mining industry (Dec 30, 2003)
    • Calub to be given to private companies on concession (Feb 19, 2003)
    • Russians sign for 50 percent shares in Calub (February, 2002)
    • World Bank  Leaves Off Extending Loans to Calub  (August 19 - 26, 2001)
    • American Company Contemplates Calub Gas Exploitation (August 2001)
    • Africa "Key Source" for Energy Supply and Development Senior U.S. energy official  testifies before Congress March 16 2000
    • Sicor plans 375-mi Ethiopian pipeline - January 2000
    • Small  firm signs $1.4 billion deal to develop gas project in Ethiopia: December 1999
    • Ethiopia  Signs $1.4 Billion Deal With U.S. Firm Sicor: Reuters; December 9, 1999
    • A Second Wind For Calub Gas February 1999
    • Ethiopia withdraws bid for sale of gas company February 02, 1999
    • Inventory of fossil fuel extraction projects financed by World Bank Group, mid-1992 to 1997


Tsvetana Paraskova - Jun 28, 2018, 6:00 PM CDT

This Country Just Started Pumping Oil For The First Time Ever

Ethiopia began on Thursday its first-ever crude oil production under a test production scheme that will see initial production of 450 barrels of oil per day.

Ethiopia, a rather large country in east Africa, started production from oil fields in its southeast today.

On Wednesday, Fitsum Arega, Chief of Staff of Ethiopia’s Prime Minister Office, said that Ethiopian Prime Minister Abiy Ahmed met with representatives of the company Poly-GCL Petroleum Investment Limited “to officially kick start crude oil production test in Ogaden Region. The company has discovered that there is a prospect of commercial quantities of crude oil in the region.”

Poly-GCL Petroleum Investment is a joint venture of state-owned China POLY Group Corporation and the Hong Kong-based company Golden Concord Group.

Prime Minister Abiy Ahmed said that Poly-GCL Petroleum Investment Limited would start producing 450 barrels of crude oil a day as of June 28, state-affiliated Fana outlet reports.

Ethiopia also plans to start in September the construction of a pipeline that would export natural gas via Djibouti, Ethiopia’s neighbor to the northeast that lies on the Bab-el-Mandeb Strait. The strait is located between Yemen on the Arabian Peninsula and Djibouti and Eritrea in the Horn of Africa, connecting the Red Sea with the Gulf of Aden, and a major sea route for crude oil from the Middle East.

The construction of the natural gas pipeline via Djibouti will take two years, Fana quoted the Ethiopian prime minister as saying.

Once Ethiopia starts exporting natural gas at full capacity, it hopes to earn US$8 billion a year, PM Ahmed said.

Oilprice.com



24 March 2018, By Kaleyesus Bekele

Chinese company strikes oil, additional gas reserve

The Reporter
Poly-GCL, the Chinese company engaged in oil and gas exploration and development project in the Ethio-Somali Regional State, Ogaden basin, has discovered oil and gas deposits.
Poly-GCL, which signed petroleum exploration and development agreement with the then Ministry of Mines in November 2013, has been prospecting for oil and gas reserve in a vast exploration area in the Ogaden basin. The company is also trying to develop the Calub and Hilala gas fields which was found in the Ogaden basin many years ago.  
Koang Tutlam (MD), state minister of the Ministry of Mines, Petroleum and Natural Gas, told The Reporter that Poly-GCL has discovered additional gas reserves in the Calub gas field. “In the appraisal wells the company drilled around Calub it has discovered additional gas reserve. If you remember we were talking about 4.7 Trillion Cubic Feet (TCF) of gas reserve. Now the recoverable gas amount reached 6-8 TCF. The amount has increased significantly,” Dr. Koang said.
Dr. Koang said Poly-GCL has discovered some amount of oil in the new exploration wells it drilled around Hilala locality, 1,200 km southeast of Addis Ababa. “In the new exploration wells they drilled they have found some oil. But we do not have figures right now. The company is making assessment to determine the amount of oil. We will reveal the figures once the assessment is completed.”  
The Calub and Hilala gas fields were discovered by an American company called Tenneco in 1972. Former Union of Soviet Socialist Republics (USSR) oil firm, Soviet Petroleum Exploration Expedition (SPEE), which was prospecting for oil in the Ogaden basin in 1980s, confirmed the gas reserves in Calub and Hilala localities estimated at four TCF.
A veteran petroleum geologist told The Reporter that Poly-GCL has found additional gas reserve in the same Calub structure but in a different horizon. “They have been drilling additional wells to appraise the existing gas reserve. So they must have found additional reserve in a different horizon.”   
The petroleum geologist said it was not for the first time when trace of oil was found in the Hilala locality. Tenneco discovered a non-commercial oil reserve in Hilala in 1973. Oil shows have also been noted in various exploration wells drilled in Hilala and Elkuran localities.
The petroleum expert said that the Chinese now came up with a latest oil exploration technology that enabled them to identify what the Americans did not see. “They have not found a new structure but they have discovered some oil in a different horizon. The Americans and Russians were working in the Ogaden in the 1960s, 70s and 80s. Now we are in 2018 and the Chinese have an advanced exploration technologies that enable them to trace the hydrocarbon resources.”  
The petroleum expert pointed out that Poly-GCL has conducted 3D and 2D seismic surveys that helped them to undertake “successful” exploration work. However, he said it was too early to forecast the amount of oil reserve that the Chinese discovered. “It is only after successive well taste and exhaustive geo chemical laboratory analysis that they can determine the amount of the reserve. At this moment one cannot tell that the reserve is commercial or not.”  
Poly-GCL has subcontracted another Chinese company, BGP Geo Services, which has been collecting seismic data in the license area covering 93,000 sq.km of arid land.   
In addition to the ongoing exploration work, Poly-GCL is trying to exploit the natural gas reserves in the Calub and Hilala gas fields. Eight gas production wells have been drilled and made ready for production in Calub. Poly GCL planned to extract the gas reserve in Calub and Hilala and export it via a gas pipeline that would be constructed from the gas fields to all the way to the port of Djibouti.
Dr. Koang told The Reporter that works on the gas development project is progressing. “Poly-GCL has signed agreement on the pipeline construction with the governments of Ethiopia and Djibouti. We (the Ethiopian government) are now negotiating with the Government of Djibouti on the pipeline construction. It is an intergovernmental negotiation,” he said.
According to Dr. Koang, Poly-GCL will build an LNG plant in Djibouti that would change the gas into liquid natural gas which will be exported to China with special LNG vessels. The total cost of the gas development project is estimated at four billion dollars. Dr. Koang said Poly GCL would start exporting gas by 2021.
In the meantime, Poly GCL is working on the gas development plan. “They are working on the pipeline construction plan,. They are working on it with full swing,” Dr. Koang said.    
If Poly-GCL’s gas field development project comes to fruition Ethiopia would soon become a hydrocarbon producing country.

January 11, 2017 Translated and posted by Amare Asrat
FBC

Chinese firm begins drilling 6th petroleum, natural gas well in Ethiopian Somali regional state

Poly-GCL, one of the companies engaged in natural gas exploration in Ethiopia, has so far drilled five deep gas wells around Calub and Hilala areas at the Ogaden basin.
The company had officially started yesterday the drilling of the 6th gas well-called Hilal-7, in the presence of Motuma Mekassa, Minister of Mines, Petroleum and Natural Gas and La Yifan, Chinese Ambassador to Ethiopia.
In an interview with EBC, Motuma Mekassa said the country will begin extracting natural gas after three years.
“Unlike the other drillings, the digging at Hilal-7 is special as it took into consideration exploration of both petroleum and natural gas,” the minister added.
Chinese Ambassador to Ethiopia, La Yifan, on his part said such kinds of projects will strengthen co-operation and bilateral ties between the two countries.
The drilling of Hilal- 7 gas field will be finalized within 6 months.
Calub, Hilala Genale areas have 4.7 trillion cubic feet of natural gas deposits. The deposits were discovered in the 1970s.
Poly-GCL signed an agreement with the Ethiopian government in 2013 to explore petroleum and natural gas at the Ogaden region.


06 Aug, 2016 By Kaleyesus Bekele  
MINISTRY MOVES GAS DEVELOPMENT PROJECT FORWARD
The Reporter
The Ministry of Mines, Petroleum and Natural Gas and the Chinese oil and gas company, Poly GCL, are moving the Ogaden gas development project forward.  
The ministry has established a committee that oversees the construction of the gas export pipeline all the way from the Calub gas field to the port of Djibouti.
Poly GCL has entered into an agreement with the Ethiopian government to develop the Calub and Hilala gas fields in the Ogaden basin in 2013. Poly GCL has been undertaking various preparation work to build a gas treatment plant and a gas pipeline that would be used to export gas to China and other international markets via the Port of Djibouti. The Ethiopian and Djiboutian governments have signed a Memorandum of Understanding (MoU) on the planned gas pipeline construction.
Tolossa Shagi, the minister of Mines, Petroleum and Natural Gas, told The Reporter that the ministry has established a committee that will oversee the construction of the gas pipeline which would cost four billion dollars. Tolossa said that the committee in collaboration with Poly GCL is working on the facilitation of the gas pipeline construction. The committee is tasked with dealing the details of the implementation of the gas pipeline construction project.
“The committee will study the trails in which the pipe will be lined, the quality of the pipes and the environmental impact of the project. The project is moving forward,” Tolossa said.
In two appraisal wells drilled in Calub and Hilala gas fields last year Poly GCL found out promising results showing a much larger gas reserve than originally anticipated.
Previously, 10 wells were drilled in the Calub gas fields out of which eight were made ready for gas production. The Calub gas field is located 1200km south-east of Addis Ababa. Hilala is located 80km further to the east. The total gas reserve is estimated at 118 billion cubic meters. The gas fields were first discovered by an American company in 1972 and the gas reserves were confirmed by Russian company, SPEE, in the 1980s.
Sources told The Reporter that the new testing results may increase the gas reserve estimate made many years ago. According to sources, PLOY-GCL is preparing a gas field development plan based on the revised reserve estimate.
In November 2013, Poly GCL singed petroleum development agreement with the Ethiopian Ministry of Mines, Petroleum and Natural Gas that would enable the company to develop the Calub and Hilala gas fields located 1200km south-east of Addis Ababa. The company has also agreed to search for oil and gas in eight exploration blocks in the Ogaden with a total area of  117,151 sq.km.
Poly-GCL plans to construct a 830km gas pipeline all the way from the Calub and Hilala gas fields in the Ogaden basin to the Port of Djibouti and to build a gas treatment plant at the Djibouti port. The company plans to produce three million tons of Liquefied Natural Gas (LNG) annually and mainly export it to China through the port of Djibouti.  The total amount of natural gas the company plans to pump out from the two gas fields each year is 4 billion cubic meters. The total investment cost of the gas development project is estimated at four billion dollars. The company hopes to start commercial gas production in 2019. The Ministry of Mines, Petroleum and Natural Gas expects the company to launch production in the end of the second GTP term.
Encouraged by the well testing results Poly GCL is expediting the gas development project. The cornerstone for the gas export terminal was laid in Djibouti in March 2016. Sources told The Reporter that construction of the pipeline will commence in 2017 and will be completed within three years.  
Poly-GCL is also acquiring 3D and 2D seismic data from its concession in the Ogaden basin. The company which imported two drilling rigs would drill new exploration wells based on the seismic data collected from the concession area. In addition to the planned gas development project, the company hopes to strike new oil and gas deposits.


Jan 1, 2016 By Aaron Maasho

China's POLY-GCL completes gas appraisal wells in southeast Ethiopia

ADDIS ABABA Jan 1 (Reuters) - China's POLY-GCL Petroleum Group Holdings Ltd has finished drilling two appraisal wells in Ethiopia's southeast and will soon know the size of gas deposits there, a senior Ethiopian official said.

Ethiopia says the wells in the Calub and Hilala fields in the Ogaden Basin should show deposits of 4.7 trillion cubic feet of liquid natural gas (LNG) and 13.6 million barrels of associated liquids. The deposits were discovered in the 1970s.

"They have finished drilling and are now conducting tests on the reservoir. Tests will conclude soon," State Minister of Mines, Petroleum and Natural Gas, Wakgari Furi, said.

"We may start gas production in 2016. They are working fast," he told Reuters in an interview late on Thursday.

POLY-GCL, a joint venture between state-owned China POLY Group Corporation and privately owned Hong Kong-based Golden Concord Group, plans to drill five wells in Ethiopia's southeast, including three wildcat exploration wells.

The project involves developing the fields and building a pipeline from landlocked Ethiopia to the coast of neighbouring Djibouti, where it will build an LNG plant and export terminal, according to a company website.

POLY-GCL estimates the cost at $4 billion and initially expected to start LNG production by mid-to-late 2018 at 3 million tonnes a year at first, rising to 10 million tonnes.

Foreign firms have acquired licences to explore in more than 40 blocks in Ethiopia over the past four years, mostly in the southeast near Somalia.

Africa's eastern seaboard could soon become a major global LNG producer, with other planned projects based on big gas finds made in Tanzania and Mozambique.

POLY-GCL was set up to develop oil and gas in Ethiopia, and aims to expand to other countries. It signed a deal with Ethiopia's Mines Ministry in late 2013 to develop both fields in the Ogaden Basin. It also has eight other exploration blocks. (Editing by Edith Honan and Louise Ireland)

© Thomson Reuters 2017 All rights reserved

http://af.reuters.com/article/ethiopiaNews/idAFL8N14L05620160101


Mar 27, 2015 By Aaron Maasho
Ethiopia eyes gas production, exports by 2017 - PM
ADDIS ABABA, March 27 (Reuters) - Ethiopia expects to start producing and exporting natural gas from under-developed reserves in its southeast by 2017, Prime Minister Hailemariam Desalegn said on Friday.
Several firms have already acquired licenses to explore more than 40 blocks throughout Ethiopia in the past four years, the vast majority of them in the southeastern Somali Region.
"Studies show the existence of natural gas reserves in several places, and they will all be gradually developed," Hailemariam told a press conference in the Ethiopian capital.
Officials from the mines ministry say the Calub and Hilala fields in the Ogaden Basin have deposits of 4.7 trillion cubic feet of gas and 13.6 million barrels of associated liquids, both discovered in the 1970s but not yet exploited.
"For the time being, a Chinese firm is carrying out activities on the Calub and Hilala reserves," Hailemariam said. "In the next two years, we plan to start exporting and using the natural gas from these areas."
Hailemariam did not give further details, but China's GCL-Poly Petroleum Investments signed a production sharing deal with Ethiopia's mines ministry in late 2013 to develop both fields.
The prime minister was speaking a month after the Horn of Africa country signed an agreement with neighbouring Djibouti to construct a pipeline stretching from the same region to the Red Sea state's port.
"GCL-Poly Petroleum Investments will fund the pipeline that will transport the Ethiopia gas to Djibouti for a total cost of more than $4 billion, of which $3 billion will be invested in the Djibouti section," said Mohamed Nour, a communications adviser at Djibouti's energy ministry.
A number of firms have filed requests to explore oil and gas in the country's Abay, Mekelle, Metemma, Gambela and the Southern Rift sedimentary basins in addition to the Ogaden, including Tullow Oil and SouthWest Energy.
Ethiopia's Somali Region used to be plagued by security concerns, with the Ogaden National Liberation Front (ONLF) waging a low-key struggle for independence.
Analysts say the rebels have been severely weakened over the years by government forces, but warn they can still hamper development with hit-and-run attacks. (Additional reporting by Abdourahim Arteh in Djibouti; Editing by George Obulutsa and Crispian Balmer)
© Thomson Reuters 2017 All rights reserved


04 October 2014 Written by Kaleyesus Bekele

Chinese company plans to produce gas by 2018  

Prepares bid documents

The Chinese company that acquired the Calub and Hilala gas fields in eastern Ethiopia, POLY GCL Petroleum Investment Limited, this week announced that it plans to start extracting natural gas from the gas fields by 2018.

On November 16, 2013, the Ethiopian Ministry of Mines and POLY GCL Petroleum Investment Limited signed petroleum exploration and development agreements in Addis Ababa.

The agreement enables Poly GCL to develop the Calub and Hilala gas fields found in the Ogaden basin in Eastern Ethiopia. The agreement also allows Poly GCL to prospect for oil and gas in Blocks 3&4, 11&15, 12&16, 17&20 exploration blocks in the Ogaden basin.

According to Li Wei, general manager of Poly GCL, since signing the PSA, Poly GCL organized a competent project team and set up a management system in accordance with international petroleum industry practice. “We have submitted the 2014 work program and budget, finished the comprehensive geology and geophysical study, signed the contract with a company to begin the Environment Impact Assessment (EIA) study,” Wei told The Reporter via email.

According to Wei, Poly GCL is in the process to hire a company that would undertake a seismic survey and drill exploration wells for additional discovery. “We are preparing bidding documents for seismic and drilling work tender,” Wei said.

According to the current plan, the first stage of the project will produce around 3 million tons of LNGs (Liquefied Natural Gas) annually and is expected to go into production in 2018. According to the exploration and development plan, 4 billion cubic meters of natural gas will be produced each year from Calub and Hilala block and option is to transport the gas northward through a pipeline of 800 km long to Djibouti port and finally market the products in the international market.

As to the figure of total investments, the company said it can only be estimated after certain exploration work and the completion of the Master Development Plan.

“Empirically, we have started both the exploration and construction work, for instances, the site survey, the bidding process for different packages, the Preliminary Front End Engineering Design (Pre-FEED) studies, the renovation and construction of the camp site, etc.”

The company said it is planning to start the seismic acquisition of exploration in 2015 and the construction and the installation for surface engineering in 2016.

The Calub gas field was first discovered by an American oil company, Tenneco, in 1972. The Hilala gas field was discovered by Soviet Petroleum Exploration Expedition (SPEE) in the 1980s. The total gas reserve is estimated at 116 billion cubic meters. (4TCF). Eight gas production wells were made ready for production by Zhongyuan Petroleum Exploration Bureau (ZPEP), a Chinese petroleum exploration company.


Ethiopia: Ministry of Mines Signs Agreement With Chinese Firm for Ogaden Gas Reserves
BY BEWKET ABEBE FORTUNE STAFF WRITER, 2 DECEMBER 2013
The reserves have attracted international investment on multiple occasions, but nothing has yet been realised
The Ministry of Mines (MoM) signed a petroleum production sharing agreement (PPSA) on November 16, 2013, with Chinese firm Poly GCL Petroleum Investment Ltd, for the Ogaden basin's Calub & Hilala gas reserves, Fortune learnt.
The area, which was first identified as a potential natural gas reserve in the 1930s, has repeatedly attracted the attention of foreign investment, but nothing has been realised thus far.
About a dozen companies have obtained licences for the fields after the presence of gas was confirmed in 1972 by Tenneco - aUScompany. This has created an extensive collection of seismic and other data on the area, which is estimated to hold 76 million cubic metres of natural gas.
The companies that have gathered the information include Malaysia-based Petronas Carigali, Soviet Petroleum Exploration (SPE), Hong Kong-based PetroTrans and Chinese company Zhoungyan Petroleum Exploration Bureau (ZPEB). The latter drilled eight wells in two different sites in order to ready them for exploitation.
The exit of Petronas in 2010 was followed by an international tender in March 2011, which was won by PetroTrans after it agreed to invest close to four billion dollars to develop the gas fields. It won after beating six other bidders, including South West Energy (SWE), the National Oil Company (NOC) ofEthiopia- largely owned by Mohammed Ali Al-Amoudi (Sheikh) - and Cobramar of Seychelles.
PetroTrans then signed a PPSA agreement with the Ministry in July 2011, but the deal was terminated by the Ministry exactly a year later. This was because the company reportedly did not undertake any field works as was required according to the agreement. This created a dispute with the company, which claimed that it was analysing and interpreting old data collected from the concessions.
Since the new agreement comes against the backdrop of numerous unsuccessful precedents, the Ministry will heavily follow-up on the investment by the latest company to show interest, according to Tolosa Shagi, the state minster of Mining.
"The area has not been productive," he said. "The government wants to see something concrete in the area, so the Ministry will be keeping a close eye on it," Tolossa told Fortune.

Ethiopia Revokes PetroTrans Accord Over Lack of Investment

By William Davison

July 30 (Bloomberg) -- Ethiopia’s government revoked PetroTrans Co. of China’s production-sharing agreement because of a lack of investment, Mines Minister Sinknesh Ejigu said. “They did not fulfill their obligations,” she said in a phone interview today from the capital, Addis Ababa. “We want to realize the project on the ground, not on paper.”
The agreement for work in the eastern Somali region of Ethiopia was signed in July 2011, Sinknesh said. The government was expecting investment of as much as $5 billion by PetroTrans over the course of the project, she said.
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 region, where PetroTrans operated the Calub and Hilala fields, has 4 trillion cubic feet (113 billion cubic meters) of natural gas, according to SouthWest Energy, an Addis Ababa-based company.

SouthWest, which is registered in Hong Kong, said it may strike oil next year in the three blocks it’s exploring.
PetroTrans, which took over blocks sold by Petronas Nasional Bhd of Malaysia in October 2010, said in an e-mail it will comment later today.

The government gave PetroTrans adequate notice of its decision, Sinknesh said. “We had the right to cancel,” she said.

Petro Trans to Conduct Survey on Ethiopian Gas Fields

Monday, 02 April 2012 Ethiopian Business News - Energy and Mining

Petro Trans has contracted BGP and Sunrise, Chinese companies, to undertake seismic survey and exploration well drilling of the Calub and Hilala gas fields in Ethiopia according to Richard Spooner, Country Manager for the company.
BGP was hired last month to collect seismic data from the Hilala, calub, Genale and Warder blocks explained Spooner. Experts from the company have already begun analyzing the petroleum data collected from the Ogaden he said.
The Ethiopian Ministry of Mines has been cooperative in allowing the company access to a range of different data said Richard. 

The earlier seismic data received from the MoM will interpreted as BGP collects new data and drill areas will be decided on the basis of the findings from these studies he noted.

Sunrise was hired by Petro Trans to undertake the well-drilling work.

The company plans to drill additional exploration wells in Hilala and Calub as well as verifying the existing gas reserves at the two sites said Spooner. It is expected that Sunrise will begin drilling by the end of the current year.
Petro has also hired Chapman Engineering and NuTech to handle studies to construct the gas processing plant which is still in the early stages added Spooner. The two companies contracted for the construction project specialize in geology and construction he said.

Petro Trans aim to build an oil pipeline between South Sudan and Djibouti or Kenya. The company is currently in negotiations with Southern Sudanese officials and declined to comment further on the issue.

Source: The Reporter

Will PetroTrans succeed where others failed? (March 2012)

James Batty -Interfax Global Energy Services- 13 March 2012
 
Five years after a horrific attack on an oil facility, operated by a Chinese serivces company, that killed almost 100 people, another Chinese company, PetroTrans, is venturing back into the Ogaden region of south-eastern Ethiopia.

The company, which is owned by Chinese businessman John Chin, signed an agreement with the Ethiopian Ministry of Mines on 21 July 2011 that gave it rights to the Calub and Hilala gas fields, as well four exploration production sharing agreements (PSAs) in the Ogaden – Blocks 3 and 4; 11 and 15; 12 and 16; as well as 17 and 20. The company has CBM, LNG and oil refinery assets in Indonesia as well as various other interests in Kazakhstan, Yemen and China, but this is its first foray into Ethiopia.

It has recently opened an office in Addis Ababa, and said that work is progressing. “We have secured substantial additional data on these fields after hiring a former employee from the ministry [Ethiopia’s Ministry of Mines],” PetroTrans’ legal adviser Philip Hirschler told Interfax. “This has enabled us to process and evaluate the data in much more depth and we will have an independent company review then before getting going on the 3D seismic.”
The plan is to send gas from Calub and Hilala to the port of Djibouti via a 700-900 km pipeline, where it will be exported as LNG. The group has already signed a memorandum of understanding with the Djibouti government for use of the port, while management are evaluating the best route for the pipeline. Associated condensate production could also be exported via the port of Berbera in Somaliland (see
PetroTrans exchanges draft agreements with Djibouti over LNG export, 14 February 2011).

There is certainly the gas there to warrant investment. Calub contains initial gas-in-place of 2.7 trillion cubic feet (76.5 billion cubic metres) and initial recoverable condensate reserves are about 128 million barrels, according to the original estimates from the Soviet Petroleum Exploration Expedition (SPEE) in the early 1990s. Hilala contains gas-in-place volumes of 1.3 tcf (36.8 bcm).

A big problem is their location. The Ogaden region is a vast swathe of land in the southeast of Ethiopia populated by ethnic Somalis. Calub and Hilala are located 1,200 km southeast of the capital Addis Ababa, near to the border with Somalia. The region is underdeveloped and suffers from regular food scarcity and drought, while there are frequent clashes between government troops and seperatist elements, such as the Ogaden National Liberation Front (ONLF).
Unrest, both in the Ogaden and further afield, has played a big part in derailing previous development plans. The finds were originally made by a United States company called Tenneco in the early 1970s, just before a Marxist coup in 1974 that removed the aging Emperor Haile Selassie from power and set up a provisional administrative council of soldiers known as the Derg.

The finds languished until they were picked up by the SPEE in the 1980s. The Soviet company drilled a series of wells on both fields, proving up reserves, but not progressing beyond the appraisal stage before it was forced to leave the country after the collapse of the Soviet Union in the early 1990s. The fields were then picked up and dropped by a series of smaller companies, including the state-owned Calub Gas, Russian companies Methanol and Stroytrangaz and Middle Eastern group Si Tech International.

Malaysia’s Petronas won a tender put out by the government in Addis Ababa for the fields, as well as a series of other exploration blocks in the Ogaden, in August 2006. But the Asian company only drilled two wells, using a Chinese contractor called Zhongyuan Petroleum Exploration Bureau – a subsidiary of state-owned Sinopec, before an attack in April 2007 by more than 200 ONLF fighters on an oil production facility in the Ogaden killed more than 80 Ethiopians and 9 Chinese oil workers. All Chinese contractors in the region then pulled out. Petronas did not conduct any further work in the region and ended up relinquishing the blocks last year.

The Ogaden remains unstable. The ONLF have issued a series of warnings to PetroTrans and other companies, and claim to regularly intercept government troops that are escorting workers in the region. These claims are denied by both the Ethiopian government and PetroTrans. Regional analysts spoken to by Interfax were unable to give an independent view on these claims, with most of the Ogaden off-limits to the media and non-government organisations, but there was a consensus that the region is far from safe for companies operating there.

“It’s a mixed picture, the government and oil companies are bullish that things are improving, but in the community the ONLF is still in insurgency,” an analyst with Control Risks, Patrick Mair, told Interfax. “The UN still classifies it as a conflict zone.”

Things are not as bad as they were five years ago when the ONLF descended on Zhongyuan’s camp, largely as a result of government engagement with the rebels, he added, though the 2007 attack is still a “red flag” to warn companies that want to operate there.

In addition, “the idea of independence is not realistic [any more]”, Mair added. Chatham House Associate Fellow Jason Mosley concurs: “Things are not as hot as they were in 2007, largely because of a severe clampdown by the military.” There is also more infrastructure building in the region, though it remains “one of the poorest regions of Ethiopia”, Mosley said.

ONLF activity has also declined since 2007. The Ethiopian government says the group is funded by the Eritrean government, Ethiopia’s bitter rival after it seceded in 1993 following a long and bitter war. Funding splinter groups in rivals’ territory is a common tactic among countries in the fractious region, but the animosity between Eritrea and Ethiopia is particularly fierce. “Historically this has been a big factor, there is a deep underlying hostility, not in open warfare, but in proxy wars,” Mair said.

PetroTrans plans to take a “multi-layer” approach to security for its facilities in the region, Hirschler added. Government forces hold a monopoly over large-scale security work in the Ogaden, while PetroTrans will also use private security elements comprising people from the region. “This is typical in most oil operations; they tend to hear what is happening sooner than others.”

The size of investment will merit such outlay on security. PetroTrans has already paid the government an upfront fee of $130 million, and will invest up to $4 billion on the gas development project, the Reporternewspaper reported in July last year



Ethiopia Awards Ogaden Gas Fields to Chinese Company
 
July 23, 2011 - The Ministry of Mines yesterday awarded the Calub and Hilala natural gas fields and eight exploration blocks found in the Ogaden basin to a Chinese oil and gas company, PetroTrans Company, according to the Ethiopian Reporter.
Sikinesh Ejigu, minister of Mines and chairman of PetroTrans, Mr. John Chin, signed a petroleum development agreement and four exploration and production sharing agreements at the Sheraton Addis. The petroleum development agreement will enable PetroTrans to develop the natural gas reserves in the Calub and Hilala localities found in the Somali Regional State. The gas fields, which have an estimated reserve of four TCF (trillion cubic feet), are found 1200 km south east of Addis Ababa. 

The gas fields as well as all the exploration blocks were previously held by the Malaysian oil and gas giant Petronas. The ministry floated all Petronas’s concessions in Ethiopia except the Gambella block, found in west Ethiopia near the Sudanese border. An independent petroleum expert told The Reporter that all the blocks held by Petronas are promising for oil and gas discovery.
 
PetroTrans Company Ltd. Was established in 1997. Founded by Mr. John Chin, it has been mainly involved in the Upstream Oil & Gas Industry, as well as Oil & Gas financing and leasing. 
 
Following the withdrawal of Petronas from Ethiopia, the Ministry of Mines last March invited seven companies to bid for Calub and Hilala gas fields and the eight exploration blocks deemed promising for oil and gas discovery. The total area of the exploration blocks is 93,000 sq.km while the Calub and Hilala gasfileds cover 283 sq.km. 

The seven local and international oil companies shortlisted by the ministry bought the bid document and four of them submitted their technical and financial proposals to the ministry. The companies that returned the bid documents were PetroTrans, South West Energy Ltd, an Ethiopian oil and gas company, Cobramar of Seychelles and National Oil Company (NOC), a local petroleum which has a chain of fuel stations across the nation. NOC was established by the Ethiopian-born Saudi billionaire, Sheik Mohammed Hussien Ali Alamoudi. 

The ministry said the best proposals were submitted by PetroTrans. According to the ministry, the company will pay the Ethiopian government an upfront payment of USD 130 million and will invest up to four billion dollars on the gas development project. “When you compare the proposals of PetroTrans with the proposals offered by the other companies it is incomparable. PetroTrans’s proposal by far exceeds that of the others,” Sinkenesh said at the signing ceremony.
John Chin said that his company is committed to develop the proven gas reserves and discover new oil and gas reserves. “We have discovered oil in Sudan, Chad and Nigeria. We want to do the same here,” he told The Reporter. He said ten years ago his company built a 600-km oil pipeline from Port Sudan to Khartoum in less than ten months. “Two years ago we built 8300 kms of pipeline in China in less than two years. Once we get into a commitment we are very serious and we do it quickly,” He said. The company hopes to finalise the project within 30 months. “A study has to be undertaken to determine where to build the gas treatment plant. We also have to conduct a survey to identify the route of the pipeline,” Chin said. 

PetroTrans has been working with two renowned Chinese oil companies - SinoPec International and CNPC. The gas pipeline construction work will be given to either of the two, a company executive told The Reporter.
PetroTrans will pay to the government 35 percent income tax and a five percent royalty fee. The Ethiopian government will have a five percent stake in the project.

Source: Reporter


Petronas sells Ethiopian assets to SouthWest

Malaysian state-owned player Petronas has agreed to sell its oil and gas interests in Ethiopia to Hong Kong-based SouthWest Energy.

Upstream staff  06 October 2010 01:34 GMT

SouthWest said it had agreed to purchase 100% of Petronas’ interests in Blocks 3&4, 11&15, 12&16, 17&20 and the Calub & Hilala contract area.

All of the blocks are located south-east of Addis Ababa, in the Ogaden Basin, the largest proven hydrocarbon bearing sedimentary basin in Ethiopia, with proven gas reserves of 2-4 trillion cubic feet.

SouthWest chief executive Tewodros Ashenafi said the acquisitions provided the company with an opportunity to expand its exploration and production activities in the country.

“We intend to develop these new blocks together with our existing blocks as quickly as possible and to work on developing transport solutions for hydrocarbons in the Ogaden Basin,” he said.

The transaction is expected to be completed during the first quarter of next year.

Published: 06 October 2010 01:34 GMT  | Last updated: 06 October 2010 01:35 GMT

 
Ethiopia: Petronas Pays 80 Million Dollars for Gasfields
 
The Reporter (Addis Ababa)
22 September 2007
By Kaleyesus Bekele

The Malaysian oil and gas company Petronas last month paid the Ethiopian government 80 million dollars for the Calub and Hilala natural gas fields in the Ogaden basin, south-east Ethiopia.Pertonas won the international tender put up by the Ethiopian Ministry of Mines and Energy (MME) to privatize the Calub and Hilala gas fields found in the Somali Regional State. The ministry put up the tender in April 2006 inviting petroleum companies interested in developing the two gas fields discovered in 1973. In August 2006, MME announced that Petronas was the winner.

After a long negotiation on the details of the gas development project last June MME and Petronas signed petroleum development agreement and production sharing agreement (PSA), which enables the latter to extract and market the gas reserves in Calub and Hilala localities. Recently, Petronas paid the 80 million dollars pre-development cost Ethiopia invested on the gas fields.

A senior government official told The Reporter that the signing of the gas development project and the predevelopment cost payment were big achievements for MME. “Eighty million dollars is a big sum. The ministry has never received this amount of payment,” the official said.

The natural gas reserve in Calub and Hilala is estimated at four trillion cubic feet (4TCF). The gas fields that covers 285 sq m are found 1, 200 km south-east of Addis Ababa. The gas fields were first discovered by an American company called Tenneco during the reign of Emperor Haile-selassie. Tenneco, which drilled three wells in Calub and one in Hilala, was forced to withdraw because of the 1974 revolution that toppled Emperor Haile-selassie.

The Soviet Petroleum Exploration Expedition (SPEE), which drilled additional wells in Calub and Hilala in the 1980s and early 90s, confirmed the gas reserves. SPEE drilled seven wells in Calub and three in Hilala, 80 km from Calub. In 1998 the Chinese petroleum company, Zhoungyan Petroleum Exploration Bureau (ZPEB), contracted by the Ethiopian government, made eight of the wells in Calub ready for production. ZPEB was paid 5.6 million dollars for the well completion work.

Several companies which have shown interest to develop the gas fields held negotiations with the Ethiopian government. Secor, an American company, Methanol Joint Stock and Stroy Trans Gas, Russian companies were some of the companies which held negotiations with the government. Although these companies signed memorandums of understanding (MOU) on different occasions none of them were able to sign final agreement for various reasons.

Another company, which was interested in developing the gas fields, was SI Tech International (SIL). The Jordanian Company, SIL, signed petroleum development agreement and PSA in 2003. However, the company was unable to commence work on the project until 2006. Alemayehu Tegenu, Minister of MME, revoked the petroleum development license given to SIL and decided to tender the project.

Petronas has been projecting for oil in the Gambella basin, western part of Ethiopia and in different localities in the Ogaden basin. The company took over the Gambella block covering 16, 000 sq km of land in 2003. In 2005, the company secured three blocks in the Ogaden basin. The exploration blocks are found in Wel-Wel, Warder, Fer-Fer and Genale localities in the Ogaden basin. The total exploration area is 93,000 sq km. The company paid over five million dollars in signature bonus.

The company offered training programs for over 20 professionals working in the MME and it is also engaged in community development projects in the Gambella region. As part of its assistance to the ministry, the company upgraded ageing petroleum data collected from the Ogaden basin by different Companies.

Petronas proposed to build a gas processing plant and to construct a gas pipeline that stretches from the Calub and Hilala gasfields all the way to the Pot of Djibouti. In addition to the gasfields, MME granted Petronas two exploration blocks called B l1 and 15. B 11 and 15, which are very close to the gasfields believed to be the most promising areas for oil discoveries. Oil were noted in Calub and Hilala as wel as in bll and 15.

Petronas plans to drill exploration wells in these areas. The company proposed to invest up to 1.9 billion dollars for the petroleum exploration and development project. The construction of the gaspipeline and the gas processing plant could take over three years.

If the gas development project comes to fruition, Ethiopia for the first time, would be a hydrocarbon producing country. Petronas will pay a 35 percent income tax payment and three percent royalty fee to the Ethiopian government. The government will also have a 5 percent share from the annual gas production.

Petronas, wholly owned by the Malaysian government, operates in 35 countries in Asia and Africa. It is engaged in oil exploration and production project in African countries like Sudan, Chad and Angola. Petronas, which was established in 1974, is one of the top ten leading oil companies in the global oil industry.

Source: 2007 The Reporter.
 
Malaysia's Petronas wins Ethiopia's gas field tender
Editor:Angel K. Yan
Source:Xinhua
Updated: 2006-8-6 13:53:57
 
ADDIS ABABA, Aug. 5 (Xinhua) -- The Malaysian oil firm Petronashas won Ethiopia's ambitious Calub and Hilala gasfield development tender, it was learned on Saturday.

After evaluating the proposal presented by Petronas, the Ministry of Mines and Energy selected it, said a government official, who declined to be named.

The official said the ministry and Petronas will sign a development agreement to enable the firm to develop the gasfields that lie on 285 sq km of land. The gas reserve was discovered in 1972 by an American oil company, Tennaco. There are eight gas production wells in Calub.

Petronas, Gail India Ltd and Dinder of Sudan participated in the tender put up by the ministry. Last March, the ministry invited companies to present expressions of interest on developingthe natural gas reserve in the Ogaden basin, found in Calub and Hilala areas, some 1,200 southeast of Addis Ababa.

Nineteen international and local companies submitted letters ofinterest to the ministry. After evaluating the profiles of the companies, the ministry short-listed seven companies. Of the sevencompanies, only three submitted their proposals within the deadline scheduled for July 10.

Petronas has a plan to build a gas refinery plant at Calub and to construct a gas pipeline all the way to Djibouti that would enable it to export petroleum products.

Studies indicate that LPG, petrol, diesel, jet fuel and kerosene can be produced from the gas reserve. Petronas proposed to invest up to 1.9 billion U.S. dollars. The company also plans to drill exploration wells in the vicinity of Calub and Hilala.
 
Ministry to Revoke SIL's Petroleum Development License

The Reporter (Addis Ababa)
January 14, 2006
Posted to the web January 16, 2006
 
The Ministry of Mines and Energy (MME) is to revoke the petroleum development agreement it signed with the Jordanian company, SI- Tech International (SIL).

In 2003 the ministry granted SIL a license granting the company the right to develop the natural gas reserves in the Calub and Hillala localities in the Oganden basin. SIL had a plan to build a gas refinery plant, an electric power station as well as a fertilizer and cement factories. The company previously announced that it had allocated an initial capital investment of 1.5 billion dollars.

The company was supposed to commence work on the first phase of the petroleum project, the construction of the gas refinery plant, in July 2004. However, it was unable to launch the project according to schedule. In November 2005, the minister of MME, Alemayehu Tegenu, warned SIL that the ministry would revoke the petroleum development license unless the company started work on the project within 90 days. Officials of SIL said they were unable to launch the construction because of the inflated price of steel and the poor condition of the road to the gas fields. Minister Alemayehu however, said the explanation given by the officials was unacceptable.

The 90-day ultimatum will come to an end by next month. The ministry told The Reporter that since the company failed to operationalize the project it would nullify the petroleum development license.

The gas fields are located 1200 kms east of Addis Ababa. The gas reserve in Calub, which was discovered in 1973, is estimated to be 76 billion Cu.m. The reserve was discovered by Tenneco, an American oil company. The second gas reserve found in Hillala locality is estimated to be 42 billion cu.m The Hillala gas reserve was discovered by a Russian company, Soviet Petroleum Exploration Expedition (SPEE).

SIL to invest 1.5 billion USD in the mining industry
“At last we made it!” Mohammed Dirir
By Tamiru Geda
Many people including government officials were fed up with the frequent interruptions in negotiations for the exploration of natural gas, in the last three decades.

Lately however, things seem to be looking up for natural gas exploration, thanks to some committed petroleum companies which have shown keen interest in joining the Ethiopian government, particularly the Ministry of Mines in investing and exploring the natural gas fields of the nation.

Ambassador Mohamed Dirir said that the Minister of Mines is one of many Ethiopians eager to see this resource available and ready for consumption. He made the statement at the signing ceremony of the Petroleum Development and Production Agreement, in the Hilton Addis with the Middle East based company, Si Tech International (SIL).

Minister Mohamed expressed his happiness on the occasion. Using the same tone that the American administrator of Iraq used after the capture of Saddam Hussein, the Minister declared, “Ladies and gentlemen, at last we made it!” to the cheers of delegates from government offices and representatives of SIL.

Ziad I.Kh Mango, Chairman of SIL was present to sign the agreement with the Ministry of Mines for exploration of the Hilala gas reserves in the desert area of the Somalia Regional State of Ethiopia.

His company, he said, is committed to invest in Ethiopia and expressed regret that they did not do it earlier. “We are here for good and to invest USD 1.5 Billion to develop the 280 square kilometers of gas reserves in Calub and Hillala area.” Zaid also promised to work with the Ministry of Mines as a partner.

According to the company’s work plan, it will install a GTL plant in Dire-Dawa, with a capacity of producing 34 thousand barrels of petrol per day. It will also produce 20 million barrels of liquid petroleum such as benzene, Kerosene and diesel by using gas processing technology at Calub, within the next two years.


Calub to be given to private campanies on concession
By Kaleyesus Bekele
 
The Ministry of Mines told the Reporter last week that it was ready to give the Calub gas field to private companies on concession.

Since the effort to privatize the Calub S.C. could not be successful, it was decided to give the gas field to private companies on concession, it was learnt.

The Ministry said it was ready to negotiate with any company which had the know-how and the financial capacity to exploit the Calub natural gas reserve estimated at 76 billion cu.m.

Though officials of both the Ministry of Mines and the Calub Gas S.C had held talks with several foreign oil and gas companies to jointly develop the reserve, their effort could not bear fruit.

Methanol and STROYTRAN GAZ, the Russian oil and gas companies, signed last week a Memorandum of Understanding with the Ministry to develop the reserve. However, the companies could not sign the final agreement since they did not have the finacical resources to implement the project.

According to the Ministry, the companies came up with only the technology and asked the government to solicit funds from the international financial institutions. Two month ago the Ministry proposed to Prime Minister Meles Zenawi to dissolve the Calub Gas S.C. However, Meles did not as yet approve the proposal.

The Calub natural gas reserve was discoverd in 1973 and nine wells are ready to go into production.
 
 
ADDIS ABABA, February 04, 2002-- 

A Russian oil company, Methanol, has signed a memorandum of understanding both with the Ministry of Mines and Calub Gas Share Company to own 50 percent shares in Calub Gas, while it commits itself to invest 80 to 100 million USD during the initial phase.
 
Top executive of Calub Gas told the English weekly Fortune that the memorandum of understanding (MOU) requires both parties to jointly develop gas fields on the 76 billion cubic meters natural gas reserve, located 1200 kms south east of Addis Ababa in the Somali State.

Sinknesh Ejigu State Minister of Mines and Hialemelekot Teklegiorgis Board Chairman of Calub and State Minister of Defense signed the agreement with the director of Methanol.

Jihad Abakoyas General Manger of Calub told Fortune that the Russian company had agreed to form a joint venture share company owning 50 percent shares to exploit the gas reserves.

The General Manager revealed that the plan to develop the fields involves the construction of four refinery and petroleum extraction plants within the Calub area, with an investment reaching about 500 million USD.

The first phase of the project consists of building the first gas refinery plant.

Jihad revealed that the investment by the Russian company would increase through time depending on the results obtained from the first phase of the project.

He added that knowledge and technology transfers in executing the project would be vital.

In a similar development, another five-member Russian team representing Story Trans Gas Share Company, an oil and gas company has arrived in Addis Ababa and begun negotiations with the Ministry of Mines to engage in oil and gas explorations and development in Ethiopia.

According to Jihad, Story Trans is interested in exploration of petroleum in the Ogden basin and Gambela region. He said that the company's representatives were planning to fly to these areas for a site visit.

The delegation is currently conducting preliminary studies and is collecting date, reports and other relevant information about the basins. Story Trans is also interested in Calub Gas and holding talks with the officials. - Fortune
 
World Bank Leaves Off Extending Loans to Calub  
August 19 - 26, 2001 BY KALEYESUS BEKELE; FORTUNE STAFF WRITER

The World Bank has reportedly suspended releasing the loan it had pledged to extend to Calub Gas S.C. demanding the government to privatize the 95pc share it owns in the company to continue financing the project in return. According to our sources, the bank decided to refrain from disbursing the loan at the beginning of the current fiscal year. An initial survey conducted by the World Bank puts the Calub Gas project cost at 85.96 million Dollars of which it has committed to finance 66.31 million Dollars while the remaining is to be made up from local sources. Following the agreement with the Ethiopian government on June 23, 1994, the bank commenced to outlay some portion of the agreed loan and construction was launched in September 1995.

The standard of the loan is in International Development Association (IDA) terms with a maturity of 40 years and three years grace period. Fortune learnt that the bank's abrupt action to withhold the remaining amount of the loan is in a bid to pressing the government to speed up the privatization process of the share company to be entirely controlled by private entities. World Bank officials have declined to comment on the issue, while the general manager of Calub, said to be out of town, could not be available for comment. A minority share of only five per cent in the company is currently in the hands of private businesses and individuals, who have invested 102 million Br in aggregate. The renowned coffee exporter, Mohamed Oksedeh, is in the list of shareholders having stakes worth 200,000 Br in the company

The Ethiopian Privatization Agency had put Calub Gas S.C. on tender two years ago but attempts to privatize the company failed to materialize. An official in the privatization agency told Fortune that the bid was thwarted because of low values offered by the prospective buyers, questioning the accuracy of the amount of gas deposits declared to be available for exploitation, estimated to reach 76 billion cubic meters.

According to sources, those who have shown interest in Calub say the quantity of gas deposits, unlike other minerals such as gold, can not specifically be predetermined. Information obtained from the agency indicates four companies, Sheik Al-Amoudi's investment arm- Midroc, Santafe, Matle and Norex Group, participated in the bid. The bidders also came up with a pre-condition requesting a guarantee from the government that ensures all the towns in the eastern part of Ethiopia, including Dire Dawa and Harrar, would use electric power generated utilizing gas produced by Calub. Another reason given for the delay of the privatization process, according to the official who said he is unaware of the bank's decision to suspend the loan, is the memorandum of understanding signed between Calub and an American Company. The agency official also said that the shareholders of Calub that own the five per cent share have also objected to the tender saying that they were not informed about it prior to the privatization process.

After the cancellation of the first bid, the agency has not shown sign until now to issue a re-tender. The information officer at the agency said that Calub is not included in the list of enterprises that are on the auction block to be privatized in the short run. An American company, Cal Tech International Corp, and China National Petroleum Corporation, a Chinese company, have recently shown interest in Calub Gas S.C. for a joint venture development of natural gas. However, tangible results have not so far evolved.

The Calub Gas Project, which is thought to be a cash-cow business, comprises three components: a commercial part consisting of preparation and completion of the gas wells, construction and operation of the petroleum extraction and processing plant and privatization promotion; a regional development scheme for Ethiopians in the south eastern region; and technical assistance to the Ministry of Mining and Energy. The designing work of the refinery and the preparation of bid documents to hire a contractor for building the facility were carried out by a British firm and submitted to the World Bank, which was evaluating them until recently. The preparation of eight production wells for exploitation have been carried out and completed by a Chinese firm contracted for five million Dollars.

Sources close to the project say that the cost to launch a full-scale production, including a Urea fertilizer factory related to gas production and revised project of constructing a pipeline extending 700kms to channel gas from the production wells to Awash, where the refinery is planned to be erected, could escalate to the neighborhoods of 1.5 billion Dollars. Fortune learned that so far 96 million Dollars have been invested in the Ogaden basin. The Ogaden Basin exploration history dates back to 1920 pioneered by Standard Oil Company that first carried out a geologic survey. Since then 14 companies had taken concession and conducted exploration surveys and mapping. Tenneco, an American company at a depth of 3732 meters, discovered natural gas in 1972. Although 29 years have elapsed since gas was first discovered in Ethiopia, the country, in a rueful turnout, has not been capable to see the fruits of the discovery to date.
 
American Company Contemplates Calub Gas Exploitation
BY MIKIAS WORKU FORTUNE STAFF WRITER

An American company, which was contemplating to invest in power generating projects negotiating with EEPCo last year, has now shown interest in Calub Gas S.C. for a joint venture development of natural gas, although concrete results have not yet materialized. Representatives of Cal Tech International Corp., who were here a month ago, were briefed by officials of Calub Gas on the existing potentials and were provided with strategic data and information on the project.

Sources said that the company was requested to produce the necessary documents, which include the company's base of registration and legal status, funding, track records of the past three or four years, that should all be authenticated by the U.S. government, to start negotiation for concluding a deal. According to our sources, the company has verbally pledged to finance the construction of the pipeline that would be used to carry crude gas from the gas field to the central processing plant and refinery, which is intended to be erected at Awash, approximately 700Kms from the production wells.

The designing work of the refinery and the preparation of bid documents to hire a contractor for building the facility were carried out by a British firm and submitted to the World Bank, which was evaluating them until recently. Though Cal Tech had promised to come back in two weeks with the required documents, sources said it is now a month and there is no sign of its coming back. This same company had written a letter of intent last year to invest more than 300 million Dollars in power generation, but it is unknown where the negotiations with EEPCo presently stand.

Discovered in 1972, the Calub natural gas resource is estimated to reach 76 billion cubic meters and currently eight production wells stand ready for exploitation after being prepared and tested by a Chinese company, which was contracted for 5.6 million Dollars to undertake the job winning a tender in 1996. The company completed preparing the gas wells for production in late last year. Sources close to the project say that the cost to launch a full-scale production, including a UREA fertilizer factory related to gas production, could reach a level of 1.5 billion Dollars.
  

Africa "Key Source" for Energy Supply and Development Senior U.S. energy official testifies before Congress- March 16 2000??; 

Africa is a "key source" of diverse energy for the United States and will likely become the next important emerging market in trade and investment, energy resources, and energy consumption, a senior U.S. energy official told the U.S. Congress March 16.

In testimony before the Subcommittee on Africa in the House of Representatives, Calvin R. Humphrey, principal deputy assistant secretary for international affairs at the Department of Energy, also reminded lawmakers that Africa is the third largest oil exporter to the United States and plays an "integral role in U.S. efforts to maintain a diversified oil import base."

Humphrey chronicled a wide range of U.S. investment in Africa's energy sector, which includes:

-- Chevron's participation as the managing partner for the West African gas pipeline, which is designed to connect Nigeria's gas reserves to markets in Benin, Togo, and Ghana;

-- Exxon-Mobil's efforts in leading the development of the Chad Export Project (CEP), a proposed $3,500 million project to produce and transport 250,000 barrels of oil per day from southern Chad through Cameroon for export to world markets, including the U.S.;

-- Dallas-based Triton Energy's allocation of $191 million to invest in the development of the Ceiba Field and continued exploration and appraisal activity in Equatorial Guinea;

-- the U.S. firm Sicor and Ethiopia's announcement that they have signed a $1,400 million joint venture to develop a huge gas field in the east of the country and build a pipeline and processing units;

-- the signing by Enron, an oil and gas firm in Houston, of a power purchase agreement to supply emergency electricity to state-owned power utility Nigerian Electric Power Authority (NEPA) through 30-megawatt power barges located on the coast of Lagos State.

Sicor plans 375-mi Ethiopian line 
January 2000 Vol. 83 No. 1 Construction Report

Sicor, Inc., and the Ethiopian government have signed a memorandum of understanding to build a 375-mi, 24-in. natural gas pipeline in Ethiopia.

The $300-million pipeline would be part of the $14-billion Gazoil Ethiopia project to develop synthetic fuels using gas-to-liquids (GTL) technology.

The line would transport natural gas and associated fluids from the Calub and Hilala fields in southeast Ethiopia to Awash. There, a planned cryogenic liquids plant and a refinery will convert the gas and liquids into commercial fuels using GTL technology.

Sicor plans to commence a 12-month pre-development phase in February 2000, involving feasibility, route, and market-demand studies.

The company plans to award an $800-million construction contract for the pipeline and plant in late March 2000.

Construction could start in late March 2001 for a September 2002 in-service.
 
Small firm signs $1.4 billion deal to develop gas project in Ethiopia 
December 20 1999
Houston Business Journal
Monica Perin 
 
A small, privately held Houston company has struck a deal on a $1.4 billion energy privatization project in Ethiopia.

Sicor Inc. and the Federal Democratic Republic of Ethiopia have signed an agreement to form a joint venture, the Gazoil Ethiopia Project, which will build a 375-mile natural gas pipeline and a series of processing plants.

Sicor will hold an 80 percent stake in the joint venture, and the Ethiopian government, 20 percent.

Sicor is a six-month-old corporation -- 70 percent of which is owned by Chairman Ronnie F. Monk.

Monk formed Sicor from Cogen International Management, a partnership that was in the business of assembling and predeveloping pipeline and power projects.

Sources familiar with the negotiations say Sicor's primary competitor in the bidding was Houston-based Santa Fe Snyder Energy Co.

The project is expected to have a major impact on Ethiopia, an agricultural country that still uses wood for fuel, causing massive deforestation and land erosion.

In addition to providing liquid propane gas, electricity, water and fertilizers for domestic use, the project will generate other fuel products for export, which would greatly improve Ethiopia's foreign exchange position. The country will become a net exporter of fertilizers for the first time, a government spokesman said.

Under terms of the agreement, the Gazoil Ethiopia Project will acquire two concessions in the Ogaden basin in southern Ethiopia where four trillion cubic feet of gas and 13.6 million barrels of associated liquids were discovered by Tenneco in the 1970s.

The joint venture will also acquire 95 percent of the Calub Gas Share Co. from Ethiopia under privatization laws. The joint venture will pay the Ethiopian government $111 million for the gas company, which has carried out all the exploration and development work in the project area to date. Under the new name Gazoil Ethiopia Share Company, it will be expanded to take over all production work for the project.

The pipeline will transmit gas and other liquids to the town of Awash, 75 miles east of the capital city, Addis Ababa. At Awash plans call for construction of a cryogenic liquids plant and two gas-to-liquids process systems with capacity to process 200 million cubic feet of natural gas per day. The end products will be synthetic fuels and petrochemical feedstocks plus steam that will generate electricity and potable water.

A planned refinery will produce products including diesel, gasoline, kerosene and jet fuels. The gas-to-liquids system will also produce some 500 tons of ammonia per day as feedstock for a urea plant to be constructed.

Sicor will begin the pre-development phase of the project in late February, says Monk. It is expected to be completely on stream by Sept. 1, 2002.

Monk's previous partnership did pre-development studies for the Attacama Project in South America, a 450-mile pipeline from Argentina over the Andes Mountains to northern Chile. The project was ultimately sold to CMS Energy in Michigan.

Now, Monk says, Sicor is doing strictly gas-to-liquids projects which the company develops and owns. Sicor operates only in the Arabian Gulf and sub-Sahara Africa, where it has six other projects under consideration. Monk says he expects to sign an agreement on a project in Yemen after the first of the year.
 
Ethiopia Signs $1.4 Billion Deal With U.S. Firm Sicor
Reuters; December 9, 1999 
 
ADDIS ABABA (Reuters) - Ethiopia said on Wednesday it had signed a $1.4 billion joint venture deal with U.S. firm Sicor to develop a huge gas field in the east of the country and build a pipeline and processing units.

The joint venture, Gasoil Ethiopia Project (GEP), will develop fields in the Ogaden basin where four trillion cubic feet of gas and 13.6 million barrels of associated liquids were discovered in the 1970s, government spokesman Haile Kiros told Reuters.

The Ethiopian government will hold a 20 percent stake in the joint venture and Sicor, based in Houston, Texas, the remainder.

Details of financing were not given. GEP plans to construct a 375-mile, 24-inch gas pipeline to transmit gas to the town of Awash, around 75 miles east of the capital Addis Ababa, on the country's main railway line and highway.

Haile said the joint venture will construct a cryogenic liquid plant to strip mostly liquefied petroleum gas (propane and butane) and condensate from the gas, as well as two gas-to-liquid systems to process dry gas.

The plant would process a total of two billion cubic feet of gas a day into 20,000 bpd of fuel and petrochemical feedstocks. Waste steam would fuel a 168 megawatt power plant, he said.

The joint venture is expected to start 12 months of pre-development work in February with production slated to start in 2002.

Haile said the agreement was hugely important for Ethiopia, where the felling of trees for fuel has caused major deforestation.

The ammonia by-product from gas processing would make Ethiopia a net exporter of fertilizers for the first time, Haile said.
 
A Second Wind For Calub Gas 
The International Oil & Gas Newspaper
UPSTREAM
Vol 4, Week 5, 5th February 1999 
Barry Morgan from ACCRA

Page 2

Interest is slowly reviving in Ethiopia’s Calub gas project after the country’s Privatization Agency previously dashed hopes by withdrawing four bids submitted for the development of the onshore field, which contains an estimated 2.71 trillion cubic feet.

One of the four, Santa Fe Energy has renewed contract with the energy ministry, a department source said.

The principal reasons for refusing the bids from Santa Fe, Mapple, Knorex and Midroc was their "failure to fully comply with requirements" enabling the government to recover the $97 million it invested in phase-1 of Calub, located on block OG-1.

Two companies from the Middle East and the US have also shown interest and the agency "is now ready to accept new and revised offers", the source said. "Whether we accept the recovery of less than the full project cost will depend on the investment plan submitted."

The World Bank has earmarked an additional $74 million for the project, which aims to convert gas from the Ogaden basin into power, fertilizers and sundry industrial feedstock for export. The ministry also wants to explore the Hilale find some 80-km northwest of Calub.
 
Ethiopia withdraws bid for sale of gas company
Volume 3, issue #2 - Tuesday, February 02, 1999 
 20-12-98 The Ministry of Mines and Energy of Ethiopia announced the government's decision to reject the bid for the privatization of the Kalub Gas Share Company.

The Ministry said that the Ethiopian government has decided to withdraw the bid for the sale of its stake in the company because it found the bid results unsatisfactory.

The Ministry said the prices quoted and the terms stated by the bidders who include four international companies are not commensurate with those stipulated in the bid document.

The Ethiopian Privatisation Agency invited bids earlier this year for selling off the government's stake in the company. Four international companies including an American company have bidden for the competition. However, the prices gave by the four companies were unsatisfactory to the Ethiopian government.

The Kalub Gas Share Company, established in accordance with the Ethiopian law, aims at tapping the natural gas resources found in the Ogaden area.

According to the Ministry, a study hasconfirmed the availability in the area locally known as Kalub of 68 bn cm of natural gas and a loan of over $ 74 mm has been obtained from the World Bank for the natural gas project.

The Ministry said, the Ethiopian Privatisation Agency has been taking measures to sell off government's stake in the company, but added that now the company will continue in its present entity.   
 
Inventory of fossil fuel  extraction projects financed by World Bank Group,
Mid-1992 to 1997 
 
Type of Industry: Natural gas field development

Subsidized Project: Calub gas development

Location: Calub natural gas deposit, Ogaden Basin, Ethiopia

Owner of Project: Calub Gas Share Company (state-run)

G-7 TNC Involvement: Parsons Corp. (U.S., awarded $50 million contract for construction of gas processing plant)

World Bank Agency: IDA

Amount of Financing (estimated total cost): $74.3 million of $130.8 million, with co-financing from African Development Bank ($27 million) and the Netherlands ($4 million).

Year of Approval: FY1994

Reserves/Production: Calub holds an estimated 74 billion cubic meters (2.6 TCF) of natural gas deposits.

World Bank Description:

"By increasing the availability of fuel from the Calub natural gas deposit in the country's southeast region, Ethiopia's unbalanced structure of energy supply will be partially righted and the supply of petroleum products needed in the modern sectors of the economy increased. Road rehabilitation, technical assistance, and a poverty-alleviation component -- aimed at supporting income diversification among poor urban fuelwood carriers --is included." (World Bank Annual Report FY 1994)

Notes:

This is Ethiopia's first natural gas field development. Construction is to start in 1997 and be completed in 1998. Parsons called the project "a starting point for Ethiopia's long-term development of fossil-fuel resources." (Business Wire, Feb. 6, 1996; Xinhua, Feb. 23, 1997; Oil & Gas Journal, Feb. 12, 1996; Africa News, Feb. 26, 1997; ESP-Business Opportunities in Africa & the Middle East April 1, 1996)