World, Economy, Africa

Ethiopia begins first-ever crude oil production

Ethiopia has 6 to 8 trillion cubic meters of proven crude oil reserves

28.06.2018 - Update : 02.07.2018
Ethiopia begins first-ever crude oil production FILE PHOTO

By Addis Getachew and Munira Abdelmenan Awel


Ethiopia, for the first time ever, began producing crude oil at Kalub and Hilala fields on Thursday in the eastern part of the country.

A groundbreaking trial-production ceremony saw three oil wells spewing 150 barrels, each raising the nation’s hopes of generating the badly needed hard currency and creating employment.

The area, according to the Ministry of Mines, is proven to have 6-8 trillion cubic meters of crude oil.

The Chinese company Poly-GCL Petroleum Investment Limited is responsible for the extraction of both crude oil and natural gas in the Ogaden area, Somali regional state in eastern Ethiopia.

The announcement of trial production was made by the country’s Prime Minister Abiy Ahmed earlier.

“The oil production should never be a bane to us,” Prime Minster Abiy cautioned the nation, adding it would be instrumental in alleviating unemployment in the country.

Ethiopia plans to earn an annual revenue of $8 billion from natural gas exports, which will be made through a pipeline to be installed beginning this coming September.

The natural oil is to be extracted two years from now, according to a Twitter post by Fitsum Arega, the chief of staff of the Prime Minister’s office.

Muzeyin Sebsebei, an Ankara-based Ethiopian scholar in international relations, told Anadolu Agency that the beginning of the exports of the Ethiopian crude oil is a positive development.

"We can asses the positive impacts of the news from three perspectives. The first is promoting Ethiopia's economic development by alleviating the existing foreign currency deficit.

"Secondly, it will enhance the benefit of the local community where the crude oil deposit is found. This will contribute to the rise of the local community's trust to the central government or the newly appointed Prime Minister Abiy Ahmed's government.

"The third benefit ... is that it will facilitate Ethiopian economic diplomacy and strategy with its neighbors as well as non-regional countries," he said.

"Nevertheless, the government of Abiy Ahmed should assure the benefit of the local community and Ethiopia at large by signing a clear agreement with the company that is responsible to export the crude oil," Sebsebei also said.

Mining contributes a meager two percent to the Ethiopian economy so far while the economic structure continues to be largely dominated by agriculture which contributes 48 percent to GDP and employs 85 percent of the country’s workforce, according to Ethiopian Statistical Agency.

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