Ethiopia: White Nile to Ink Oil Exploration Deal

Ethiopia: White Nile to Ink Oil Exploration Deal

Addis Fortune (Addis Ababa)

14 January 2008
Posted to the web 14 January 2008

By Issayas Mekuria

White Nile Ltd., a British company quoted by Alternative Investment Market (AIM), will be signing an oil exploration agreement with the Ethiopian government next Tuesday, January 15, 2008, officials at the Ministry of Mines and Energy (MoME) disclosed to Fortune. White Nile's founder and Chairman, Philippe H. Edmonds, is expected to arrive in Addis Abeba, in order to sign the exploration agreement with Alemayehu Tegenu, minister of Mines and Energy, at the Sheraton Addis.

The deal will grant White Nile exploration rights over a 29,000Km area in Southern Omo and Borena - Southern Rift Basin - in Oromia and Southern regional states. The Council of Ministers has approved the concession request a few weeks ago.

This company will be the sixth firm to enter into oil exploration activities in Ethiopia: The most prominent among them is the Malaysian Petronas that is undertaking exploration activities in Gambella and Ogaden areas after signing an agreement in 2003.

Two years later, a company licensed in The Netherlands, Pexco, was granted a permit to explore for oil in the Ogaden. In 2005, a Hong Kong registered company, South-West Energy, owned by Teodros Ashenafi, signed a similar deal to get involved in the Afar Regional State. Another company conducting exploration in the same region is the United States (US) registered Afar Exploration, granted a license in 2006. The Swedish Lundin Petroleum AB, a company that is active in Sudan and Somaliland, was granted a licence in 2007 to explore for oil in the Ogaden area.

"We look forward to see White Nile conduct as significant exploration activities as all these other companies," Minister Alemayehu told Fortune.

White Nile is very familiar to the area where it wants to conduct exploration now. It has conducted geological and geophysical surveys on 70,000sqkm area of the Southern Rift Basin for two years, after it entered into a join study agreement with the Ministry in July 2005. Its findings of deep basins, potentially containing sedimentary sections similar to that of the Muglad and Melut basins of Southern Sudan, is reportedly behind its decision to enter into an exploration agreement with the Ethiopian government.

In the new agreement expected to be signed next Tuesday, White Nile will be granted exploration rights for four years. However, depending on the progress it makes, the company's licence could be renewed for an additional four years, according to Abiy Hunegnaw, director of the Petroleum Department at the Ministry. Following the disclosure of its prospective deal with the Ethiopian government, White Nile's shares were trading 14pc higher than its 45.5p (8.5 Br) on the London Stock Exchange.

Nevertheless, the Nairobi based company has been a poor performer at the stock exchange last year, according to The Financial Times. Its shares dropped by 70pc in 2007, according to the newspaper, and suffered a loss of 1.4 million pounds (26 million Br). The company has failed to secure an oilfield in South Sudan known as "Block Ba", claimed by TOTAL of France.

Sudanese state company, Nile Petroleum Corporation Ltd. Controls 44.67 pc of its shares.

No comments: