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ONLF troopers pause on top of a hill in Somali region. In 2007, the group attacked a major oil field, killing 74 people.

Jonathan Alpeyrie/Getty Images

This harsh region, thought to be rich in natural gas, is beginning to attract foreign investors after years of separatist violence and attacks on oil facilities.

The latest to defy the threats from rebels is Africa Oil Corp., a Canadian oil and gas company that on Sunday announced it had signed a petroleum exploration and production agreement with the Ethiopian government.

Shortly before the announcement, the Canadian company had received a direct warning from the main rebel group. The Ogaden National Liberation Front, which carried out deadly attacks on foreign oil company sites in 2007, issued a statement warning AOC not to pay what it called "blood money" to Ethiopia and saying that "the Ogaden is a battle zone that is not safe for an oil company to operate [in]."

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AOC had previously played down the danger. The CEO, Keith Hill, said that the majority of the ONLF had laid down their weapons and made peace with the government and that "there is one faction left and they're conducting talks with the new administration." The government and the rebel group have had on-again, off-again settlement talks, but they broke down in December.

But the rebel group's leader and some experts on the region say the danger remains real. In a telephone interview with The Globe and Mail, the ONLF founder and spokesman, Abdirahman Mahdi, boasted that they are stronger than they have ever been. "We are incredibly unified, even we have reached out to some opponents in the region" Mr. Mahdi said. "And we are the strongest, military-wise, we have ever been – almost three or four times the size of what we were in 2007."

In April, 2007, the ONLF attacked a major oil field in the Somali region near Jijiga, the region's capital. Seventy-four workers were killed, nine Chinese and the rest Ethiopian, many of them local workers from the nearby village.

There were hopes that the conflict could come to an end in the lead-up to the December peace talks. But these soon crumbled after the Ethiopian side asked the ONLF to first accept the constitution, something they refused, and rejected any preconditions.

"Although it appears that both sides are interested in reaching a deal, there are still major stumbling blocks ahead in negotiations." said Tobias Hagmann, a Norwegian expert on Ogaden. Foreign companies, he added, should be listening to the ONLF threats because the ONLF is still strong enough to attack foreign projects in Somali region. "While it is unlikely that they can replicate the April, 2007 … attack, they are certainly a threat to oil explorers."

Africa Oil Corp. has a number of projects in Kenya, Ethiopia, Mali and Puntland in Somalia. The company has three projects in Ethiopia, two of them in Somali region, Ethiopia's second-largest region, that borders Somalia .

The latest agreement covers 50,000 square kilometres in Somali region, which is believed to be rich in natural gas. Other oil-exploration companies are eager to operate in the area but the security situation has deterred them since the oil-field attack.

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Some former rebels in Jijiga, the dusty capital of Somali region, said the ONLF leader's warning to AOC is an empty threat, and that the group's strength has dwindled in recent years. "We used to be able to get our soldiers trained in Eritrea and bring them across," said Abdinur Soyan, a former senior ONLF member. "The borders are closed now for ONLF support and they are becoming very desperate and separated from their leaders hiding in the west."

Sitting outside an education centre for former ONLF members, Ismail Ibrahim, 33, who was shot in the leg and captured during a clash with regional security, said he did not believe the group was capable of attacking an oil field again. "Before, we used to go around in groups of 60, now we are normally four to six," he said, displaying a bullet wound in his leg. "We had to rob just to survive. I would say there can't even be more than 500 left. There is no way they could attack an oil field."

The ONLF is largely made up of Ogaden people, a Somali clan, and took

up arms in 1994, claiming to fight for the rights of people in the region and give them self-determination. What has followed is nearly two decades of a bloody insurgency with civilians often being targeted by both sides.

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