MOSCOW (Bloomberg) -- GPB Global Resources, a unit of Russia’s state-owned Gazprombank Group, may invest about $60 million searching for petroleum in northeastern Ethiopia, Executive Director for Corporate Communications Sergey Tagashov said.

The company last week stated it won approval from the government for a production-sharing agreement that covers seven years for exploration and 25 years for production. Investment for exploration will focus on conducting surveys and drilling test wells in a 42,000 sq km area in the Afar region that forms part of East Africa’s Rift Valley, Tagashov said in a phone interview from Pula, Croatia.

“This is pure common-sense commercial logic,” he said. “There are numerous discoveries along the East African Rift in other nations and also it ends basically in Yemen, which is a known oil-bearing territory.”

Ethiopia’s government is seeking new sources of revenue to help it offset a trade deficit that the International Monetary Fund expects to climb to $8.9 billion in July from $8.5 billion the year before. While Ethiopia has proven natural gas reserves of 4 Tcf in the east, no oil or gas has yet been produced in the country. The first oil discoveries in Kenya and Uganda being developed for commercial production fall within the Rift Valley system.

London-based Tullow Oil said last week its fourth test well in southern Ethiopia had failed to strike oil. “We’re still going forward with our exploration campaign,” company spokesman George Cazenove said on July 21 by phone from London.

Hong Kong-registered SouthWest Energy and GCL-Poly Energy Holdings of China are also prospecting. Ethiopia’s political stability, growing economy and ranking as Africa’s second most- populous country of about 90 million people are incentives for investment, Tagashov said.

“If the discovery is not big enough to pay for a major pipeline to export it, even local petroleum production might pay the bill,” he said. Surveying will begin in about three months, with GPB having the right to a 25-year production license if it discovers oil, Tagashov said.

http://www.worldoil.com/Gazprombank-GPB-Global-signs-oil-exploration-deal-in-Ethiopia.html