The Eritrea’s Red Sea coast is open for O&G (Oil and Gas) explorations, according to the country’s Ministry of Energy and Mines. Eritrean’s hydrocarbon exploration activities have stayed dormant for nearly 30 years due to ongoing conflict for independence with Ethiopia.
However, recent security improvements and successful E&P (Exploration and Production) activities elsewhere in East Africa have convinced the government to step up promotion of its untapped Oil and Gas resources in the Red Sea area.
Eritrean’s PSA (Production-Sharing Agreements) and contract model was last updated in 2000 to make its pre-salt prospects attractive to IOC’s (International Oil Companies).
According to the government, the PSA terms are negotiable and won’t require a licensing round. One would have to negotiate a MOU (Memorandum of Understanding) and work program before signing a PSA.
The profit oil is split and negotiable.
ENI, Anadarko, Perenco, and CMS O&G have all conducted G&G (Geological and Geophysical) work in the country, but largely abandoned its efforts over the last 15-20 years.
Exxon Mobil, Shell and Total are involved in the marketing and distribution of petroleum products in the country. Today, exploration of the Eritrean Red Sea is pretty much up for grabs and remains largely unexplored.
Eritrea lacks O&G infrastructure and export potentials as government’s past efforts largely concentrated on mining sector, dominated by Canadian, Australian and Asian companies, to bankroll expenditures.
Security improvements, mostly involved its relationship with Ethiopia, coupled with new technologies in development of unconventional offshore reserves, reignited government’s interest to promote previously abandoned exploration activities.
As such, it compiled volumes of technical information of the Red Sea prospects to help investors assess the area’s potentials.
The government recently began courting foreign companies at regional industry venues. It also hosted a slew of official European delegations to promote investments.