Ethiopian driller seeks place in oil history

April 8, 2013

Reuters – Tewedros Ashenafi hopes his Ethiopian exploration outfit will become the first indigenous company to make a basin-opening discovery in sub-Saharan Africa’s 21st Century oil and gas boom.

His privately-held SouthWest Energy holds 46,000 square kilometres of exploration acreage amounting to almost 4 percent of the vast, land-locked east African country.

It is looking to drill three wells in 2013 and 2014 in its Jijiga basin blocks on Ethiopia’s border with Somalia in the east of the country.

Geological similarities with oil-rich Yemen across the Red Sea could help make a country which produces no oil or gas at all into a 400,000 barrels a day producer, as much as western neighbours Sudan and South Sudan can produce together, Ashenafi hopes.
The company also has acreage in the west, in the Gambella basin bordering South Sudan, and in the nearby Jimma Block.

Ashenafi, a native of Ethiopia and the biggest shareholder in the company he founded in 2005, was in London this week to raise $100 million in a private finance placement to finance the drilling.

He would not disclose any other details about the Hong registered group’s ownership and financing, except to say that all board and advisory board directors are also shareholders.

Simon Murray and John Bond, respectively chairmen of the international mining and commodities group Glencore and its affiliate Xstrata, are on the advisory board. Miles Morland, a director of the multinational brewer SABMiller and a long-time Africa investor, is on the main board. Ashenafi holds his owns stake through a family trust.

Gas was discovered in Ethiopia in 1972. Revolution and war have held back development since then, but a wave of oil and gas development has spread up the east coast in recent years from Mozambique through Tanzania, Kenya and Uganda.

“Ethiopia, I think, is going to be next”, Ashenafi told Reuters by telephone.

“It has huge potential and is very underexplored. The Jijiga basin alone is 367,000 square kilometres. That’s larger than the North Sea, and there have only been 50 wells drilled.”

Potential exit routes for Ethiopian oil include Djibouti and Somalia, and at 50,000 barrels a day and growing, home consumption is a potential option too.

SouthWest Energy holds Jijiga blocks 9, 9A and 13, with similar sedimentary rock to oil and gas-rich areas of the Middle East. It estimates possible overall oil volume at between 1.5 billion and 3 billion barrels.

International companies working in Ethiopia include Tullow Oil and Africa Oil which are exploring along the country’s southern border with Kenya.