The Ethiopian government has reached a peace deal with a rebel group active in a gas-rich region that the authorities had classified as a terrorist organization, Reuters reports, citing government officials.
The Ogaden National Liberation Front sought the secession of the Somali Region, or Ogaden, in the eastern part of the country, but it has apparently come to an agreement with the government to drop this plan. After a number of armed clashes, earlier this year the Ethiopian government changed tack and tried the peaceful approach, which seems to have worked. ONLF declared ceasefire two months ago.
The region that ONLF wanted to secede contains oil and gas resources estimated at about four trillion cu ft combined, according to the Ethiopian government. A Chinese company, China Poly Group, has been producing gas in the region since 2013 and earlier this year began pumping oil from a field in Ogaden. At the time, Bloomberg reported, the Ethiopian government had estimated the initial income from the project at US$1.2 billion annually.
Bloomberg also cited government estimates that put the Ogaden oil and gas reserves at double the figure reported by Reuters: 8 trillion cu ft. The annual income from the exploitation of these reserves could reach US$7 billion at peak capacity, Ethiopia’s Prime Minister, Abiy Ahmed, told local media in June.
Ethiopia is the fastest-growing economy in Africa, and the current government, which came into office this April, has big plans including the dissolution of state monopolies in aerospace and telecoms. Developing its nascent oil and gas industry is also a priority for the new cabinet, and the peace deal with ONFL is doubtless part of efforts to address this priority. Another part of these efforts is a plan for a natural gas pipeline from landlocked Ogaden to the Red Sea coast of neighboring Djibouti. Exports via this pipeline are slated to start in 2021.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.