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» 14.05.2010 - Nile water resource dispute splits region
» 04.03.2010 - Mercenary activities focus at Addis Ababa meeting
» 25.02.2010 - Ethiopia calls for back-up
» 15.02.2010 - Ethiopia and UK leaders to head climate change team
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» 14.01.2010 - Ethiopia launches hydro-power plant
» 04.01.2010 - Eritrea was provoked - government

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Economy - Development | Politics

"Multinationals flee Ethiopia oil fields"

Oil explorations in Ethiopia by Africa Oil Corporation

© AOC/afrol News
afrol News, 8 October
- After Malaysia's Petronas this week sold out its oil and gas interests in Ethiopia's turbulent Ogaden region to the Ethiopian-owned company SouthWest Energy, rebels in the Ogaden today claim an important victory.

The Ogaden region in eastern Ethiopia, a sparsely populated area dominated by the Somali people, holds the country's largest proven hydrocarbon bearing sedimentary basin. Proven gas reserves are at 2-4 trillion cubic feet, but poor infrastructure and political instability has led to a slow development of the fields.

Oil and gas exploration in the Ogaden so far has been headed by the Malaysian company Petronas and the Vancouver-based Africa Oil Corporation. Ogaden rebels have on several occasions pressurised the foreign companies to leave the region.

Today, the Ogaden National Liberation Front (ONLF) claims its campaign against the "multinationals" has seen its first success. The rebels doubt that a real, market-based "sale" has taken place.

Petronas had opted to leave Ethiopia and the take-over by Hong Kong-based but Ethiopian-owned SouthWest Energy was only "a face-saving measure" by government, an ONLF statement claims. The intention was "to hide Ethiopia's incapacity to resolve the conflict in the Ogaden in a just way peacefully or through a negotiated settlement," the statement added.

SouthWest majority owner Tewodros Ashenafi, on the other hand, says the deal with the Malaysians was stroke already on 24 September on his company's initiative. "This is a fantastic opportunity for SouthWest Energy to expand its exploration and production activities in Ethiopia," commented Mr Ashenafi.

The transaction would transform SouthWest into "the leading force in the Ethiopian upstream industry," he added. The company now was to work on developing transport solutions for hydrocarbons in the Ogaden Basin. "This development will be a cornerstone not only for SouthWest Energy's future growth, but also for the oil and gas industry in Ethiopia," Mr Ashenafi said.

Petronas has not made any statements about why it decided to sell all its Ethiopian assets. However, reports in the Malaysian press indicate that the state-owned company was disappointed by the drilling results. The discoveries, although substantial, were not great enough to defend further infrastructure investments in the remote area.

Surely, constant pressure from the Ogaden rebels and steadily increasing security costs and efforts may have contributed to Petronas' decision.

For the ONLF, the decision in any case is a propaganda victory. Foreign companies had now "seen through Ethiopia false claims of controlling the Ogaden and had opted out of the Ogaden. Therefore, the regime had been forced to hide behind its own company in order to cover up its inability to guarantee to companies access to what it does not own or control," the rebels hold.

The Ogaden rebel movement again pointed to human rights abuses and "massacres" committed by the Ethiopian army in the province in connection with oil exploration - a claim partly sustained by research done by Human Rights Watch. The Ethiopian government forcefully has rejected these claims.

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