Oil and Natural Gas in Eritrea

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• Hydrocarbon exploration, primarily offshore in the Red Sea, began in the 1960's when Eritrea was still federated with Ethiopia. In 1995, Eritrea signed a production sharing contract (PSC) with U.S.-based Anadarko Petroleum (Anadarko) for the offshore Zula Block. Anadarko signed a second PSC for the offshore Edd Block, located south of the Zula Block, in September 1997. Anadarko announced, in December 1997, that it had reached an agreement with ENI/Agip (Agip) to swap interests in exploration acreage. Anadarko received a 25 percent interest in a Tunisian block operated by Agip, and Agip received a 30 percent share in the 6.7-million acre Zula Block and 30 percent interest in the Edd Block. Burlington Resources, a U.S.-based independent who later merged with ConocoPhillips, later joined the consortium by acquiring a 20 percent interest in both acreages. Anadarko's first two exploration wells, both drilled on the Zula Block, were unsuccessful. In January 1999, a third dry well, Edd-1 on the Edd Block, was drilled. Citing the disappointing exploration results, Anadarko and its partners ceased exploration activities and relinquished their rights to the offshore blocks.

• Another attempt also did not meet with success. In May 2001, U.S.-firm CMS Energy signed an exploration agreement for a 14,000-square kilometer block in northeastern Eritrea, but the company did not find oil. CMS Energy sold its exploration interests to Perenco S.A. of France in late 2002.