Ethiopia is endowed with energy resources such as coal, biomass, solar energy and natural gas and is not a great consumer of petroleum fuels. Current natural gas reserves are estimated to be 24 million cubic metres.
95% of the energy consumed in Ethiopia is derived from traditional energy resources. The balance is made up of electricity and oil products. Less than 4% of the population, however, is supplied with electricity. Consumption of liquid fuel products, in 1997, according to the US Department of Energy was approximately 550 000 metric tons.
The industry is regulated by the Ministry of Mines and Energy. The Ethiopian National Committee (ENEC) was established to deal with issues related to the energy sector and to assist in policy making and setting of priorities. ENEC operates through the Ministry of Mines and Energy as a planning secretariat. Energy parastatals and the agencies established for geothermal and petroleum exploration report to the Permanent Secretary of the Ministry or to the Minister directly. His Excellency, Izaddin Ali Zikeh is presently the Minister of Mines and Energy.
Ethiopia’s current proven hydrocarbon reserves are minimal, but the potential to increase reserves to commercial viability is seen as promising. The country’s geology is similar to that of its oil-producing neighbors to the east (on the Arabian peninsula) and the west (Sudan). In April 2001, the Ministry of Mines and Energy reported that hydrocarbon seeps had been discovered in several regions.
In June 2003, the Ethiopian government signed an oil exploration deal with Petronas for 5,800 square mile tract in Gambela, in the far western part of the country. The region is closely related the Sudan oil fields. Petronas has committed to investing in regional infrastructure, employing local staff, improving health services, and developing the skills of the ministry of Mines. Petronas is also interested in natural gas exploration in Ogaden, but no official plans have yet been made.
With the closure of the Assab refinery in 1997, Ethiopia is totally reliant on imports to meet its petroleum requirements. Some petroleum imports are received at the port of Djibouti, and shipped via rail and tanker truck to Ethiopia. With the recent development of oil in Sudan, however, Ethiopia has begun importing oil which, under COMESA, is not subject to tariffs. Oil imports from Sudan began in January 2003 transported by tanker trucks along a new road between the two countries.