“Ethiopia Will Most Likely be An Oil Producing Country”

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Tewodros Ashenafi is the founder of the first Ethiopian Oil and gas company, South West Energy. He is also Chairman of South West Development, a joint venture partner in Ambo Mineral Water S.C. where he is Chairman of the Board. He is also a member of World Economic Forum. Kaleyesus Bekele of The Reporter spoke to Tewodros about the World Economic Forum and oil and gas exploration projects in Ethiopia.

The Reporter: Tell us about the World Economic Forum

Tewodros Ashenafi: The World Economic Forum is an independent international organization committed to improving the state of the world by engaging business, industry, political and other leaders of the society to shape the global agenda. It was founded by Professor Klaus Schwab 42 years ago.

You were nominated as the first Ethiopian Young Global Leader (YGL) in 2009; tell us a bit about the Young Global Leaders.

The YGL is a unique multi-stakeholder community of young leaders within the WEF community who, when nominated, are under the age of 40, coming from all regions of the world and representing business, government, civil society, arts and culture, academia and media, and social entrepreneurs. We meet several times a year to convene, catalyze and positively impact the global agenda through community initiatives and task forces. We try to work on some of the major challenges we face in the 21st century.

World Economic Forum for Africa will soon be held in Ethiopia. I know that you were one of the people that helped make this happen. How was this initiative started?

South West Energy is the only Ethiopian company which is a member of the World Economic Forum even till now, and we hope that this will change in the near future. So when I got involved in the World Economic Forum community a lot of people were not familiar with Ethiopia or about the potential we have. I tried to spend a lot of time working on this fact both within the WEF and YGL communities. The WEF Africa Forum usually takes place in Cape Town. A few years ago there was a decision to hold the Forum every other year in another African city. When the time came to select a choice for the 2012 Summit, working closely with the Africa team we helped the WEF in selecting Addis Ababa as the venue for 2012.

How will Ethiopia benefit from this conference?

This is an incredible combination of global business leaders, civil society leaders, and some of the most important global opinion shapers. By having these leaders here in Ethiopia I believe that we will go a long way in changing the image of Ethiopia, which was crafted by well-intentioned Rock Stars in the 1980s. I think the conference will attract a significant amount of Foreign Direct Investment that would help the country create many job opportunities. Hopefully, there will be a follow up of events, joint ventures formed, etc. which would benefit the whole Ethiopian people.

I know that you are on the Board of Directors of East West institute. Tell us about that.

The East West Institute is a think tank based in New York that is engaged in promoting peace and security by devising innovative solutions and mobilizing networks of individuals, institutions and nations to implement these solutions. Fellow EWI board members, among others, include Martii Ahtisaari, former President of Finland and General James Jones (Ret.) former National Security Advisor to President Obama. For example, EWI recently facilitated the visit of the senior leadership of the Chinese Communist Party to the United States where those leaders met with prominent members of the Republican and Democratic Party elites. Such meetings are a part of EWI’s Strategic Trust-Building Initiative to bridge differences between different countries and societies.

You are chairman of the Ambo Mineral Water SC. Can you tell us a bit about Ambo’s progress?

As you know South West Development in joint-venture with SABMiller took majority control of the Ambo Mineral Water Factory in 2008. I believe that we have managed to transform the company completely through new management systems, practices and by introducing new products. Our Ambo flavor has been a huge success. SABMiller is a fantastic operator and a great partner, and we have exceeded the expectations set by the Privatization Public Enterprises Supervisory Agency with whom we first did the transaction.

Are you guys thinking further about the beer business in Ethiopia?

I wouldn’t want to speculate either way but I can say that SABMiller is primarily a brewer and the second largest in the world by volume. South West Energy is engaged in oil and gas exploration projects in different parts of the country.

Can you please tell us about South West Energy?

South West Energy is actually the first Ethiopian indigenous oil and gas exploration company. We have three oil exploration blocks in the Ogaden basin of the Somali Regional State and we have recently signed a petroleum development agreement with the Ethiopian Ministry of Mines that would enable us to explore and develop oil and gas reserves in the Gambella basin. We also have a joint study agreement with the Ministry of Mines in the Jimma block. We are one of the top ten concession holders in East Africa in terms of area.

South West Energy has a very impressive Board and Advisory Board, can you tell us a bit about that?

Indeed we are fortunate to have, among others, people such as Sir John Bond, current Chairman of Xstrata, and former Chairman and CEO of HSBC, my good friend Simon Murray, Chairman of Glencore, and Lord Malloch-Brown, former Minister for Africa, Asia and UN and member of Gordon Brown’s Cabinet, as Advisory Board members. All the board members and advisors are investors in South West Energy and give the company invaluable advice and guidance.

How are SWE’s operations going?

When we first started out, there was a lot of skepticism about SWE, both within the country and also in the oil and gas investment community in general. As time went on, slowly but surely, we demonstrated our capabilities. For example, we recently completed 1,640 line kilometers of 2D seismic in blocks 9, 9A and 13 in record time. In other words we completed 1 million man-hours of seismic work without a major injury or accident. Even within the standards of large oil companies, that would be considered an impressive achievement.

As you said the journey has not been easy. For example, in 2007 you survived a plane crash?
Yes. We were flying back in a small private charter from the Gambella border to Addis and at 11,000ft, the engines cut out. In the subsequent crash, a good friend and former Country Manager for Petronas, Mohammad Aris, died.

Were you injured badly? How long did you stay in the hospital?

I was very blessed that I managed to walk away without a single broken bone. I guess my Patron Saint, St. Gabriel, certainly guarded me on that one. Of course, I was bruised and various minor cuts but for the most part I was OK. I actually didn’t spend one night in the hospital; I just made it home.

Do you have any final words regarding the oil and gas industry in Ethiopia?

I think the exploration and the oil potential of Ethiopia is promising and we believe that Ethiopia will be an oil and gas producing country. We are working on behalf of all the Ethiopian people. We are also working for the local communities in the Somali Regional State and Gambella. Of course that being said, when oil is discovered, people should not be thinking that they have won the lottery. To the contrary, people should work harder and put more effort towards entrepreneurial ventures. For the youth I see a lot of opportunities in the industry. The young should be thinking of learning geology, geophysics, engineering, starting businesses to support this sector, etc. Of course I realize that there are a lot of young people with great business ideas, but unable to finance those ideas. We must try to foster a culture of venture capital and start up investing to assist these very smart, dynamic youth. And I believe it will happen.

As you know the East Africa Rift system is considered as promising for oil and gas discoveries. More oil is being discovered in East Africa. Tullow Oil of the UK discovered oil in the Albert basin of Uganda. And recently Tullow discovered oil in Turkana Kenya. Significant amount of natural gas reserves were discovered in Tanzania and Mozambique. Did these discoveries raise your hope?

Over the years I have heard nearly 100 times from oil and gas industry veterans that there is no oil in E. Africa, only gas. That has been the conventional thinking for some time. With all the discoveries you just mentioned, this no-oil theory has now been debunked. As new technologies emerge and old basins are being revisited with fresh ideas, new oil basins will continue to be opened. We should remember that 200 million years ago the continents were one land mass, so the Arabian Peninsula and East Africa were one land mass. So the oil producing rocks deposited in the Middle East were also deposited in East Africa. There are proven gas reserves already and good indications of the existence of oil resources in Ethiopia. It is only a matter of time and lot of hard exploration work to make it a reality.

[News Dire]



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