Ethiopia's Ministry of Mines and Energy and Lundin East Africa BV, a Netherlands-based company, on Tuesday signed an agreement to enable the latter carry out exploration and development of a petroleum basin in the country's eastern state of Somali.

Under the agreement, the company will allocate 1.24 million U.S. dollars to explore and develop a petroleum basin in the first four years of exploration period.

The development and production period will be 25 years and may be extended, said a press release circulated at the signing ceremony.

The initial term of exploration period will be four years, and may be extended as appropriate, the press release said, adding that the exploration area covers 24,420 square km.

The Netherlands-based firm will provide preference to the employment of Ethiopian nationals and utilize domestic goods and services as long as they are readily available at competitive prices and of comparable quality.

Lundin East Africa BV is highly experienced in the field of petroleum exploration and is currently engaged in petroleum exploration and development activities in France, the Netherlands, Norway, the UK, Tunisia, Nigeria and Sudan, among others.

Moreover, a total of 17 foreign companies have shown interest to take part in the development of Calub and Hilala gas fields in eastern Ethiopia's Somali state.

The gas reserve in Calub, 1,200 km east of Addis Ababa, is estimated at 2.7 trillion cubic feet (76.41 billion cubic meters) and the reserve in Hilala, a locality found 75 km east of Calub, is estimated at 1.7 trillion cubic feet (48.1 billion cubic meters) . The two gas fields cover a total area of 285 square km.

Ethiopia is endowed with energy resources such as coal, oil and natural gas.

Source: Xinhua