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In early November 2021, it was reported that troops from the
Tigrayan People's Liberation Front (TPLF), in alliance with other
forces and rebel groups, were rapidly advancing south to seize
Addis Ababa, the Ethiopian capital. Prime Minister Abiy Ahmed
immediately declared a six-month state of emergency across the
whole country and asked citizens to prepare for the fight. Worried
about an imminent attack, the U.S. (and other countries) requested
its residents to leave the capital and urged TPLF to stop their
advance. The U.S. also announced a freeze of the duty-free access
for Ethiopian goods agreed in the African Growth and Opportunity
Act.
As of 9 November, rebels aligned with the TPLF, such as the
Oromo Liberation Army (OLA), were reportedly advancing towards the
capital, but news about when the troops could arrive is confusing
due to communications having been cut off. On 5 November, nine
anti-government groups, including TPLF and OLA, signed for the
United Front of Ethiopian Federalist and Confederalist Forces
alliance "to command and coordinate military and political efforts
to solve the conflict".
The conflict started one year ago when in November 2020, PM
Ahmed launched a military operation against the TPLF, following a
federal army base attack. The TPLF had before organized regional
elections in September 2020 without the national office's consent,
which led to the re-emergence of previous tensions between the two
parties. The military operation consisted of capturing the Tigray
region, northern Ethiopia, and its capital Mekele, with the
assistance of Eritrean and Ethiopian paramilitary troops.
Implications for the upstream sector
In a video published at the Africa
Oil Week (AOW) 2021 webpage, the State Minister for Mines and
Petroleum, Dr Koang Tutlam Dung, presented a promotional campaign
for Ethiopian E&P opportunities and the upcoming update of the
Petroleum Code to attract investors. An overview of the potential
of the blocks was given, with a focus on areas close to the 8 Tscf
of gas discoveries to be developed by the Chinese Poly CGL group in
the Ogaden sub-basin. However, he did not mention the current
above-ground risk of investing in Ethiopia, with the ongoing civil
war and the security issues it might carry. While confirmed to be
present at the Dubai AOW in early November, the Ethiopian
delegation eventually could not travel due to the conflict.
Current companies with assets in Ethiopia are not making
significant progress in their respective projects. The British
company New Age (African Global Energy) Ltd has postponed its
planned seismic studies to 2022 and is selling up to 50% interest
to develop the El Kuran oil field in the Somali Basin. It is
unlikely that New Age will find a partner in a short period,
considering the civil war.
The GPB Global Resources B.V. company has not even listed the
Afar asset among its planned projects on its website. This is a
deeply unexplored area, with no wells drilled and far from the gas
prolific Ogaden discoveries.
The Chinese Poly CGL has been the most active company in recent
years, with large volumes of gas pending to be developed at the
Calub, Hilala and Dohar fields in the Ogaden sub-basin. The holding
planned to build a pipeline and LNG complex in Djibouti to export
the gas (3 MMtons/year) to China. In November 2020, Poly CGL
reported that an external evaluation of the project was in
progress, but no announcement has been released on the state of
operations since then. Surprisingly, in the video mentioned above,
Dr Solomon Kassa, Director of Petroleum Exploration and Development
Operations Licensing Directorate, said that the Ministry is looking
for companies to construct the pipeline and the LNG complex. It is
unknown if the Chinese group has withdrawn from the project or is
also looking for constructors, but given the civil war, it is
improbable that this massive infrastructure will become a reality
in the upcoming years.
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