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News: Ethiopia’s first certificate on gas reserves shows presence of seven trillion cubic feet in Ogaden Basin

The oil and gas reserve certificate handing over ceremony at the ministry of Mines and Petroleum

Addis Abeba – The Ministry of Mines & Petroleum today received the first gas reserves certificate following the completion of a four month study verifying the extent of oil and natural gas reserves in Ethiopia and how to extract them. The study document revealed the the presence of seven trillion cubic feet (TCF) in the Ogaden Basin, located in Somali regional state.

The certificate was handed over to Takele Uma, Minister of Mines and Petroleum, by the American company Netherland, Sewell & Associates, Inc (NSAI), American based petroleum property analysis and consulting firm with offices in Dallas and Houston,Texas, which conducted the study.

Speaking at the handing over ceremony of the document, presence of the new study helps to create a system of accountability, the Minister said, adding works were underway to materialize the study into practice.

“This document is a confirmation certificate of Ethiopia’s natural gas volume and economic viability. With this certificate, we can invite companies with technological, financial and investment potential at the international level. It also empowers the government’s bargaining power,” Takele said.

Minister Takele further said that in the past, it was only known that that oil and natural gas reserves existed in Ethiopia, but not the amount. “I believe it [the certificate] will also be a good wake up call to the companies that are holding our wealth captive with misinformation.”

It is to be recalled that in March this year, the Ministry issued a list of conditions to be met by Chinese owned POLY-GCL Petroleum Group Holding Limited, related to its years of activities in the Ogaden Basin. The Ministry warned the company that failure to comply with the ultimatum will result in the “termination of the PPSAs… without a need for further notice.”

The letter, seen by Addis Standard, says that the Ministry is “convinced that POLY-GCL failed to maintain the required financial capability and it is necessary to take corrective measures to that effect.” Accordingly, the Ministry set three ultimatums to be met by the petroleum group.

However, the Minister did not mention the names of companies in his remark today. In December 2021, the ministry had donated 50 million birr that it said was collected from mining and oil companies operating in the Somali regional state to the regional president Mustefa Omer. The money was earmarked to build infrastructure facilities in the region, including schools and health facilities.

In October 2019, Dr Kuang Tutlan, then State Minister of Mines & Petroleum announced a new formula which was being devised outlining revenue share between the federal government and regional states where oil exploration incomes are generated from. According to Dr. Kunag, the revenue share formula will see 50% share for the federal government and the remaining 50% will be disbursed to a given regional state where the resource is found.

Out of the 50% revenue to be disbursed for a given region where the resource is found, 10% of it will be allocated for the specific area where the resources is found, while the remaining 40% of it will be for other parts of the region including the specific area where resource is found. Out of the 50% federal revenue, the 25% will be disbursed to other regional states, Dr Kuang Tutlan said at the time. It is not clear if the formula was implemented since. AS

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