The Malaysian oil company, Petroliam Nasional Berhad (Petronas), which is prospecting for oil and gas reserves in the Ogaden basin, south eastern part of Ethiopia, is demobilizing its drilling crew. Following the announcement of Petronas to cut back on overseas exploration projects, there is prevalent speculation that the company will pull out from Ethiopia. Previously, Petronas relinquished its concession in the Gambella basin, south-western part of Ethiopia, near the Sudanese border, after drilling two exploration wells that turned out dry. Another exploration well drilled by the company last year in the Ogaden basin in the Genale locality also turned out to be dry.

In addition to Petronas's recent announcement to cut back on overseas exploration project and concentrate on exploration works in Malaysia, the security problem in the Ogaden has made the public to speculate that the company would pull out from Ethiopia.

A senior official at the Ministry of Mines and Energy (MoME) denied the rumor to the effect that Petronas was to abandon its exploration blocks in the Ogaden. The official told The Reporter that the company does not have a plan to withdraw from Ogaden. “After drilling the second well in the Ogaden basin near the Hilala gas field, the company suspended work on the field with the view to interpreting and analyzing the data obtained from the well,” the official said.

According to the official, based on the seismic data collected in the exploration areas, the company drilled one well at Genale (Genale 1) and another one at Hilala (Hilala 4) and currently, the company has decided to suspend the drilling work and study the results obtained so far.

A Dubai-based company called Weather Ford was subcontracted by Petronas to do seismic and drilling works in the Ogaden basin and drilled the two exploration wells in Genale 1 and Hilala 4. “After analyzing the results, executives of Petronas will deliberate on continuing the exploration work and they will also identify the locations where more exploration wells will be drilled,” the official said.

The senior official of MoME said that Weather Ford, which accomplished its task, was demobilizing its drilling rig and other machineries from Ogaden to the Port of Djibouti. “Since there will not be drilling work that will be undertaken by Petronas in the near future, it is not viable to keep the drilling crew and machineries idle, which are expensive. So the subcontractor is leaving but will come back when Petroans is ready for another round of drilling work,” he concluded.

Petronas’ Ethiopian branch office is not allowed to speak to the media while the company’s head office in Kuala Lampur did not respond to The Reporter’s written queries.

However, company sources told The Reporter that at present the company does not have any plan to evacuate from the Ogaden. “The company has invested a lot of money here. How can it simply leaves its concession after making huge investments?” they wonder.

However, some of the employees of Petronas’ Ethiopian office told The Reporter that they were told by the management that they would be working only for the next six months. Company sources said the claim was unfounded, adding that there will be no layoffs.

Petronas has been prospecting for oil in the Ogaden basin since 2005. Petronas acquired three blocks Genale, Callafo and Wel Wel-Warder in 2005 from the MoME. Later, the company acquired Block 11 and 15. In June 2007, the company signed an agreement with the ministry to develop the Calub and Hilala gas fields and made an upfront payment of 80 million dollars to the Ethiopian government.


The company planned to build a gas treatment plant and to construct a gas pipeline all the way from the gas fields to the port of Djibouti. The total investment is estimated at 1.9 billion dollars. However, work on the gas field development project has not yet commenced for various reasons, including security issues.

However, Petronas has been undertaking various exploration activities in its concessions that lie on 93,000 sqm plot.

Petronas first came to Ethiopia in 2003 and acquired the Gambella block covering 16,000 sqkm plot of land. After conducting seismic surveys in the exploration area, it drilled two wells (Jigaw 1 and Jakaranda 1) in the Jigaw and Jakaranda localities about 200 kms away from the Sudanese border. As the Gambella basin is the extension of the oil productive Melut basin of the Sudan, hopes were high for oil discovery. However, both wells were dry (no oil or gas shows were noted).

source: reporter.

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