Lundin Petroleum has signed Production Sharing Contracts (PSCs) for the exploration and production of oil and gas in four Ogaden Basin blocks in southern Ethiopia and in the Adigala Area, northern Ethiopia.

Introduction
As part of an ongoing review and evaluation of a number of sedimentary basins in the Horn of Africa, Lundin Petroleum identified the Ogaden Basin as being highly prospective and underexplored. Lundin Petroleum has entered into two PSCs as operator with 100% interest, covering four blocks. In addition, a PSC covering the Adigala Area has been acquired on a minimum work programme.

Exploration
The Ogaden Basin covers around one-third of Ethiopia, an area of around 350,000km and is located in the south-eastern part of the country. The basin is licensed into 21 blocks with Blocks 2, 6, 7 and 8 covering approximately 47,500 km. To put this area in perspective, a United Kingdom offshore licence block covers 220km so these two PSCs cover the equivalent of 111 UKCS blocks. The blocks lie immediately west of the Hilala and Calub gas and condensate fields, discovered in the early 1970’s that are estimated to contain 4 Tcf of gas.

The Ogaden Basin is characterized by deep, asymmetrical grabens separated by internal highs as a result of a rift system that was active during Late Palaeozoic to Mesozoic times. Basin sag took place and since the Late Cretaceous, there have been periods of compression and structuration.

In the Ogaden Basin, the Permian to Jurassic sedimentary succession reaches a thickness of up to 10 km in the deeper parts and includes non-marine to deep marine clastics, shallow-to-deep marine carbonates and evaporates. This sedimentary succession has proven petroleum potential.

There is a three-fold subdivision of source rocks in the Basin:
· Within the Upper Jurassic Uarandab shales
· Within the carbonate-evaporite Middle to Lower Jurassic Hamanlei Formation
· Within the Permo-Triassic Bokh Formation shales

There are three main groups of potential reservoir rocks defined in the Basin:
· Carbonates in the Middle to Upper Jurassic Hamanlei Formation
· Sandstones in the Late Triassic to Early Jurassic Adigrat Formation
· Sandstones in the Permo-Carboniferous Calub Formation.

Exploration Activity
Exploration activities in the Ogaden commenced in 1950 and have seen relatively short periods of activity by a number of private and state companies interspersed by periods of longer inactivity. Given the size of the Basin, only minimal exploration activities have been undertaken with fewer than 70 wells having been drilled, of which only 17 can be considered true exploration wells, and only around 22,000 line km of 2D seismic have been acquired. In Blocks 2, 6, 7 and 8 no wells have been drilled and there are only 14 seismic lines across the two blocks. Hunt Oil drilled the most recent well in the Basin in 1995.

Work Programme
Although Blocks 2, 6, 7 and 8 are frontier exploration blocks, there is a proven working petroleum system with source, reservoir and seal.

Lundin Petroleum has completed reprocessing of legacy seismic data and acquired new gratiy and magnetics. Acquisition of 2D seismic will take place in Q4 2008. A single exploration well commitment exists for the initial period, to be drilled in Block 7 or 8.

On the Adigala Area, a frontier exploration programme consisting of aero-gravity/magnetic survey has been conducted with encouraging results. The Adigala Area is a totally unexplored basin, but one which may have geological similarities with adjacent basins in Somalia and Yemen.