Rebels in Gas-Rich Ethiopian Region in Talks With Government

(Bloomberg) -- A rebel group in eastern Ethiopia’s gas-rich Somali region began landmark peace talks with Prime Minister Abiy Ahmed’s government.

The talks may lead to a referendum on self-determination after a three-decade insurgency by the Ogaden National Liberation Front in an area where gas extraction could generate $7 billion of state revenue a year. They’re the latest step toward a political thaw in the Horn of Africa country in the wake of sweeping political reforms initiated under Abiy since he came to power in April.

Representatives of the ONLF met Somali regional state’s acting President Mustafa Omer and Ethiopian government officials in Asmara, the capital of neighboring Eritrea, ONLF Foreign Secretary Ahmed Yassin Abdi said by phone from the Kenyan capital, Nairobi. The ONLF has agreed to work with Mustafa to seek “more rights for the Somali people,” according to Ahmed.

The meeting “reached a common understanding on the issues discussed and the way forward,” he said, citing a joint statement issued Tuesday by the group and Ethiopia’s government. The parties discussed the “modalities” of future negotiations, with “substantive talks” to be finalized soon, according to the statement.

The talks came a day after the ONLF said it would demand a referendum on self-determination.

Revenue Sharing

Mustafa said last week he will seek a constitutional amendment to negotiate a greater share of oil and gas revenue for the region from Ethiopia’s federal government and is establishing a commission to investigate expropriation of land from its original owners, moves that may aggravate a scramble for the region’s energy resources.

“We are confident there might be a degree of willingness from the new leadership for renegotiating with the regions about the sharing of the natural resources that belong to the regions,” Mustafa said in an interview in Ethiopia’s capital, Addis Ababa.

Ethiopian premier Abiy Ahmed introduced a “pro-poor” budget in July that stipulated “the community” must benefit from minerals development. This, Abiy said in televised comments, must be done in a way that removes “illegal systems” and fosters community support.

Resource ‘Cartels’

Mustafa said “cartels” close to the federal government’s military and intelligence establishment made decisions about the region’s oil and gas. Days before Ethiopia’s federal government deposed the former regional president in August, ex-President Abdi Mohamoud Omar said individuals from Ethiopia’s Tigrayan ethnic group who controlled the army’s eastern command were allocated oil wells in the region. In televised comments, Abdi said he didn’t know how such deals were made.

Defense Minister Motuma Mekessa, previously petroleum minister, didn’t immediately respond to two calls and two text messages seeking comment.

Mustafa said he supports Abiy’s stated position to allocate 5 to 10 percent of revenue for communities in “exact areas” where oil and gas is located, without elaborating. Talks on revenue sharing between the region and Ethiopia’s federal government have yet to be held, Mustafa said.

Poly-GCL Petroleum Group, a partnership between China Poly Group and closely held Hong Kong-based Golden Concord Group Ltd., signed five production-sharing agreements with Ethiopia in 2013 to explore an area in the Ogaden basin.

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