Ethiopia+Petroleum+and+Natural+Gas

=Ethiopia's Revocation of Petroleum And Mineral Licenses To PetroTrans Company Ltd And Security Threats In Ogaden Basin Make Chinese Investments In Ethiopian Petroleum and Natural Gas Unlikely Over The Next Five Years=

Executive Summary:
Despite initial estimates of Ethiopia's oil reserves of 2.7 billion barrels and 4 trillion in cubic feet of natural gas reserves in the Ogaden Basin, it is unlikely Chinese petroleum investors will invest in the area, because of the high security threats associated with the basin as well as Ethiopia's Ministry of Mines revoking of Chinese PetroTrans Company Ltd license in 2012. PetroTrans invested millions of dollars in the risky Culab and Hilala blocks in the Ogadin Basin. Rebels attacked the basin in 2007, killing nine Chinese and 65 Ethiopians who were part of an exploration team, effectively shutting down drilling and exploration activity by the Chinese in the region until 2011 and cancelled in 2012.

Discussion:
Ethiopia is considered to be one of the more developed countries in Eastern Africa, yet despite its estimated 2.7 billion barrels or petroleum and 4 trillion cubic feet of natural gas reserves China has not invested as much money as it has in Ethiopia's neighboring countries. One good reason for this occurrence is that on 13 June 2011 the Ethio pian Ministry of Mines awarded PetroTrans Company the Calub and Hilala natural gas fields and eight exploration blocks in the Ogaden basin. However in July 2012 the Ministry cancelled the petroleum development with PetroTrans, claiming PetroTrans failed to follow its work schedule of developing the gas fields in three years in the region, which PetroTrans is reported to have protested such claims furiously.

The countries landlocked but strategic location, especially for transport of natural resources, make it an important country the Chinese cannot ignore. There are six exploration basins covering 35,000 square miles in Ehtiopia, but unless China can move past the PetroTrans situation and security risks that drove the Chinese out of Ethiopia in 2007 by rebels are dealt with Chinese investors in petroleum and natural gas are unlikely to explore new opportunities in Ethiopia.

**Analytic Confidence: **
Analytic confidence for this assessment is high. Source reliability ranges from medium to high. There is no conflict between sources. The analyst had low expertise, worked alone but collaborated with a team, and did not use structured analytic methods. The subject is moderately complex and the deadline was moderately difficult to meet.


 * Analyst**: David Bott