Eritrea: Massive Untapped Oil and Gas Reserves
Eritrea is sitting on massive oil and gas reserves, but the government doesn’t seem to be too interested in exploiting them—for now.
by CDE | March 25, 2016
Eritrea’s natural resources, especially oil and gas, remain virtually untapped largely as a result of the 30-year war for independence and later the 'border skirmish' with Ethiopia.
While there is plenty of evidence emerging now that Eritrea holds massive oil and gas reserves, the country’s leadership have kept quiet about it despite the country can produce 200,000 barrels of oil per day from the single block.
So why has there been no real surge into Eritrea? The 30-year war was a bit off-putting, and security concerns have lingered, though the situation can now be considered very stable. The earlier gas finds in Eritrea weren’t very attractive because there was no market for it at the time, but that, too, has changed.
But this is pretty much a similar story everywhere. Now, with the flurry of exploration activity in Africa—from major discoveries in Uganda and Kenya, high-level production activities in Sudan and even exploration in war-torn Somalia; Eritrea should be on everyone’s radar.
The government has until very recently chosen to more or less save its hydrocarbons for the future and instead rely on mining activities to bankroll other sectors.
Recently, Tullow Oil Plc's vice president for Africa, Tim O'Hanlon, visited Asmara to meet with several officials from the energy and mines ministry to pick up blocks in the country. The former UK Conservative leader Michael Howard led as well a group of British businessmen to seek investment opportunities in Eritrea’s hydrocarbon sector in March 2014 after the government admitted in 2010 that Eritrea was sitting in huge oil and gas reserve.
Robertson Red Sea International Ltd and Eritrea’s Ministry of Energy and Mines has compiled all technical information of the Red Sea prospective areas in two volumes to help investors determine hydrocarbon potential.
The Ministry is also offering downstream opportunities, such as the rehabilitation of its Assab refinery, the construction of a new refinery, oil and gas distribution licenses and more. Eritrea will end up being the last stop on the East African frontier—once everything else is explored, the Red Sea will spark renewed interest.