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.