Petronas, Malaysia’s international oil and gas company, started drilling last month its second oil exploration well in the Gambella basin, southwestern Ethiopia, near the Ethiopian-Sudanese border.

A development and production sharing agreement was signed in June 2003 between Petronas and the Ethiopian Ministry of Mines and Energy (MME) for oil exploration in the Gambella basin. Since 2004, Petronas has been gathering seismic data covering 16,000 sq-km of land in this exploration area and accordingly, the company drilled the first exploration well in a locality called Gigaw. But this well turned out to be dry. However, the company discovered oil-generating sedimentary rocks, and as such, decided to start drilling the second exploration well, some 60 km from the first.

Like the first well, the second one will have a depth of 3500 meters and the drilling is expected to be completed in three months. The Gambella basin is an extension of the oil productive Melut basin in Southern Sudan. Petronas is already active in Sudan where it is engaged in developing 30% of the oil fields.

Petronas is also active in Ethiopia; the company took three exploration blocks in the Ogaden basin, in the eastern part of the country. In August 2005, Petronas acquired exploration areas in the Genale, Kelafo, Wel-Wel, Warder, and Fer-Fer localities in the Ogaden basin. The total area of the concession is 93,000 sq-km.

The company also obtained the development of the Calub and Hilala gas fields in the Ogaden basin where natural gas reserves are estimated at 113 Bcm. Petronas has proposed building a gas processing plant and a gas pipeline connecting the gas fields to the Port of Djibouti. For this project, the company plans to invest $1.9 billion. If the project is realized, Ethiopia would be a hydrocarbon-producing country for the first time.

The gas fields were discovered in 1973. Ten wells in Calub and four in Hilala were drilled. Eight of the gas wells in Calub are ready for production. Currently, Petronas is collecting seismic data in the Gunale locality.