Ogaden Oil (1): A Brief History

More than a century has passed since the first attempts were made to extract oil and gas in Ogaden. During this period, the successive Ethiopian regimes all tried to exploit the oil and gas resources in this region. However, due to the fierce resistance of the locals against these attempts, and to some extent the frequent regime changes in Ethiopia prevented a successful extraction.

In the first of a five part series covering the history, environmental impact, employment, and benefit sharing of the resources in Ogaden basin, I will briefly talk about the history of the oil in Ogaden basin.

The first actual exploration of oil and gas in the region took place in 1915 by an American company called Standard Oil. At the time, only a small western part of the Ogaden was in the hands of Ethiopia. And it was this part where Standard Oil carried out its explorations.

In 1945, Sinclair Oil Corporation, another American company, came to the Ogaden region. The company came at the behest of Haile selase, the Ethiopian emperor at the time. According to the March 22, 1948 edition of Chicago Tribune, an American newspaper, the emperor signed a 50 years concession agreement with Sinclair to explore and extract oil and gas from the Ogaden. At the time the region was under the British occupation on behalf of Ethiopia.

The company started its first explorations in Wardheer. However, the citizens of Wardheer organized mass demonstrations against the operations of the company saying the land and its resources belonged to Somalis and it is only they that can allow or reject the exploration.  These protests forced the British ruler to suspend the operations of the company.

A sign of Sinclair on Galadi Camp, east of Wardheer, 1957. The sign says: Utopia of the Ogaden, Somali haven, civilization in the bush, old folks, paradise, sure wish my brother was here.

Between 1959 to 1967, a German company called Gewerkschaft Elwerath operated in the region. It built roads and conducted exploration activities.

Gewerkschaft team with Ethiopian Air force officers, Mustahil, 1961

From 1969 to 1975, another American company named Tenneco Oil Company conducted explorations in the region and discovered an estimated 68 million cubic meters of gas. The company discovered natural gas resources in Calub. It also discovered crude oil in Halala.

In 1974, a military coup ousted the imperial regime with which Tenneco signed a 50 years concession agreement. Subsequently, the company was expelled from Ethiopia in 1977. The Ogaden war of 1977-8 further hampered the explorations in the region.

Tenneco drilling rigs on Hilo Quraan, 1972

The socialist military regime brought a Soviet company called Soviet Petroleum Exploration Expedition (SPEE) to work in Ogaden basin. The company operated in the region from 1980 to 1991. It conducted drilling operations in Calub and Hilala fields and confirmed the natural gas reserves in Calub. However, the concession agreement of SPEE was terminated after the downfall of the military regime in 1991.

SPEE employees inspecting well testing equipment, Calub, 1986

After 1991, many oil companies came and left the region. In 2007, Petronas, a Malaysian oil giant, started operations in the region. However, in 2010 the company ceased operations and abandoned its concessions following the deadly attack of ONLF on Obole in 2007. At the time, Zhongyuan Petroleum Exploration Bureau, a Chinese company, was exploring the site on behalf of Petronas.

In 2011, the Ethiopian government signed an agreement with PetroTrans, a Hong Kong-based company. The company was to replace Petronas by taking all its concessions. After a year, however, the Ethiopian government cancelled the agreement it had with the company citing the company’s failure to start operations on schedule.

In 2013, Poly-GCL, a Chinese oil company, replaced Petronas. The company currently operates in Calub, Hilala, and Dohar fields. The company’s license area is 93,000 square kilometers which is equivalent to 33% percent of the Somali region.

“At present, the natural gas recoverable reserves has been proved to be over 120 billion cubic meters in the two development blocks Calub and Hilala”, says the company on its website. Poly-GCL also operates on Dohar gas field which it discovered in 2017 near Hilala.

Poly-GCL and representatives of the Ethiopian government at Calub handover ceremony

In 2018, Poly-GCL extracted oil from Hilala gas field.  The company plans to construct a pipeline all the way to Djibouti where a plant will be built and Chinese vessels will take the gas to china. The pipeline construction, whose length will be 749km, was slated to start in 2018. It was, however, delayed to early 2019. But it is already five months into 2019 and nothing has begun.

Poly-GCL pipeline design and path starting from Hilala gas field
New Age pipeline starting from Hilo Quraan and connecting to Hilala joining Poly-GCL’s pipeline

Another company operating in the Ogaden basin is New Age, a British energy firm. It currently operates in two locations in the basin. One is in Hilo Quraan, Afdheer zone and the other is around hadhagaale, Siti zone.

For more than a century, Ethiopia tried hard to exploit the petroleum in the Somali region. However, it failed miserably due to two factors. One was the relentless resistance of the people of the region against the exploitation of their resources without their consent and consultation. The other factor, to a less extent, was the regime changes in Ethiopia.

Now, the situation has changed. A political reform and democratization are apparently underway in the country. ONLF, which was a major obstacle to extracting these resources, decided to peacefully struggle for the rights of the region’s people. As a result, the political and security hindrances that prevented the companies from extraction are now nonexistent.

In addition, Ogaden basin is one of the last untapped energy frontiers in the world. It is also East Africa’s energy province. Therefore, a new scramble for the Ogaden basin is likely in the coming years since energy companies are salivating for the oil and gas reserves in the region. The administration of SRS, ONLF, and people of the region should get ready for the upcoming scramble so that their resources are extracted with their consent and their consultation and by respecting their fair share.

Ogaden Basin covers the whole of the Somali region and Ethiopia divided it into 21 blocks so that they can be awarded to different companies. In other words, the whole region is open for exploration and exploitation. This will pose a grave danger to the fragile environment as well as the livelihoods of the pastoral citizens. The regional administration should think of this beforehand.

Ogaden basin is divided into 21 blocks for exploration. As can be seen from this map, the whole region is up for sale.

Mohamed Maqadin
Maqadin@outlook.com