The government has started the process of procuring 40,000tn of benzene in response to the potential shortages that could be caused by the disruptions of the Novel Coronavirus (COVID-19) pandemic. The Ethiopian Petroleum Supply Enterprise signed a deal two weeks ago for the supply of the oil from the Abu Dhabi National Oil Company (ADNOC), a state-owned oil company of the United Arab Emirates. The Enterprise is negotiating with the company to ensure the delivery of the benzene by the end of May.
Although the order was made two weeks ago, the cost of fuel is going to be determined at the spot price when the fuel is procured, according to Tadesse Hailemariam, CEO of the Enterprise. The estimated spot price for cargoes of 95 RON, a premium gasoline standard, for loading in Fujairah, UAE was 20.68 dollars a barrel on Thursday, April 30, 2020, according to S&P Global Platts, a provider of commodity data. Based on this price, Ethiopia would be paying approximately seven million dollars before shipping costs.
Global oil prices are currently at 20-year lows, pressured by both a substantial fall in demand due to COVID-19 and a supply glut caused by a disagreement between Russia and Saudi Arabia, two of the top three producers in the world. There are certain conditions in which if there is a five percent drop in the Brent or Platts index on the global market, then there will be a contract revision, according to Serkalem Geberkirstos (PhD), the former CEO of Dalol Oil currently working as a consultant.
Houston business delegation named after Congressman Mickey Leland to visit Ethiopia
One of the leading US oil firms, Chevron, has shown an interest to engage in oil exploration and development projects in Ethiopia.
Following the launch of Ethiopian Airlines scheduled passenger flight service between Addis Ababa and Houston, Texas, a business delegation led by the Mayor of Houston, Sylvester Turner, will be visiting Addis Ababa in March 2020. Africa’s largest airline, Ethiopian, launched a thrice weekly flight to Houston on December 16, 2019. Ethiopian Airlines executives and passengers aboard the maiden flight ET546 were received with a warm welcome when the B787 Dreamliner airplane landed at George Bush International Airport.
The following day executives of Ethiopian Airlines led by the CEO of the Aviation Group Tewolde Gebremariam held a high-level meeting with officials of Chevron at Zaza Hotel in Houston. Ethiopian Ambassador to the US, Fitsum Arega, the US Ambassador to Ethiopia Michael Raynor and Gezahegn Kebede, Honorary Consul General, attended the meeting.
Sudan and Ethiopia agreed on Friday to establish a joint oil pipeline, to serve the two countries. This came during a meeting held by Sudanese Minister of Energy and Mining Adel Mohamed Ibrahim, with his Ethiopian counterpart, Seleshi Bekele, in the capital Addis Ababa, as part of an official visit by Sudan’s Prime Minister Abdalla Hamdok and a number of his ministers to Ethiopia.
According to the official Sudan News Agency (SUNA), Ibrahim explained that Khartoum and Addis Ababa will invite Juba to “co-establish another branch of the pipeline to extend it to reach the State of South Sudan for the benefit of the people of the region.”“The Ethiopian side is very interested and enthusiastic about this project, and we will start to implement it soon after the completion of partnership procedures,” Ibrahim added. He continued “the Ethiopian side also presented a second project, a partnership in the Sudanese Nile Petroleum Co. Ltd., and Ethiopia will present a written proposal on this partnership.”
A directive issued by the National Bank of Ethiopia (NBE) requesting foreign oil companies engaged in oil and gas exploration and development projects in Ethiopia to open a foreign currency bank account in Ethiopia has frustrated international oil companies.
The directive compels the oil companies to have a foreign currency bank account with Ethiopian commercial banks which will be supervised by the NBE. The companies can withdraw cash in local currency for their expenditure for the oil and gas projects.
“All purchase of goods and services will be transacted in line with foreign exchange directive of the National Bank of Ethiopia through the banking system,” NBE said.
Previously, the oil companies used to have offshore accounts and a local currency bank account in Ethiopia. The companies transfer foreign currency to their local accounts that they use to finance their oil and gas exploration projects in Ethiopia. The new directive now requires the oil companies to open and maintain foreign currency accounts in Ethiopia.
The companies had the right to open and freely maintain foreign bank accounts outside of Ethiopia. However, the new directive stipulates that the companies should open and maintain a foreign currency account in Ethiopia.
All the international oil companies engaged in oil and gas exploration and development projects have furiously protested NBE’s directive. The companies have lodged their complaints to the Ministry of Mines and Petroleum. “Even after a series of communications with the Ministry and the NBE the problem could not be resolved,” representatives of the oil firms told The Reporter.