London, UK, February 13, 2012 - PetroTrans, a Chinese oil and gas producer could conclude preliminary negotiations with Somaliland for the extension of the key port of Berbera by the end of this year, but has scrapped plans to build a liquefied natural gas facility.

Philip Hirschler, a legal adviser for PetroTrans, said from London the firm planned to extend Berbera port's container and mineral export services following an agreement it signed with the government of Somaliland last August.

The Horn of Africa has been attracting increased investments in exploration by foreign oil firms, due to its proximity to east Africa, where oil has been discovered in Uganda and natural gas found in Tanzania.

The Hong Kong based company had planned to build gas pipelines from the field and at least two trains and LNG tankers for possible export of the product.

"Some of the project that was initially proposed such as the LNG facility, could not go into Berbera because it would be impossible to get any insurance on the facility," Hirschler said.

"We're still talking about (developing) a container port, a dry cargo port, and a mineral export port, once there's sufficient minerals development in Ethiopia or further west."

Ali Omer Mohamed, General Manager of Berbera port, told Reuters he expected the completion of preliminary negotiations with PetroTrans on Berbera's extension by the end of this year.

"I expect studies, contracts and agreements to be finished this year," Mohamed said.

PetroTrans signed four petroleum exploration and production sharing agreements with the Ethiopian Ministry of Mines in July 2011, paying $130 million for the rights to explore Blocks 3, 4, 11, 12, 15, 16, 17 and 20 in the Calub and Hilala Gas fields in the country's eastern Ogaden region.

Somaliland is an internationally unrecognized state that declared independence from Somalia in 1991, and hopes the deal will create thousands of jobs, raise its profile and attract more investments into the region.

Hirschler said PetroTrans had approached neighboring Djibouti on whether it could build an LNG facility there, but discussions were still in an early stage. Djibouti serves as a port for its landlocked neighbor Ethiopia.

Hirschler said PetroTrans was also negotiating with South Sudan's government to build an oil pipeline from South Sudan oilfields to the Port of Djibouti.

South Sudan, which seceded from Sudan last year, said on Thursday it was considering building an oil pipeline through Ethiopia and Djibouti. South Sudan produces about 350,000 barrels of oil per day and exports via Sudan to a Red Sea port. (Editing by James Macharia and James Jukwey)

Source: Reuters

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