Oil and gas exploration in the Red Sea off Eritrea began in the 1930s. Following independence, the country began awarding production contracts in 1995. However, as of January 2003, Eritrea had no proven reserves of crude oil or natural gas. It also has no known reserves of coal. As a result, the country, as of 2001, has had no output of oil, natural gas or coal. Petroleum imports and consumption were estimated each at 4,590 barrels per day (730 m3/d) in 2002. In 1997, due to high costs, Eritrea and Ethiopia agreed to shut down their joint operations at the petroleum refinery at Assab and import refined petroleum products. The refinery had a capacity of 18,000 barrels per day (2,900 m3/d). In 2000 an estimated 3.2 to 3.3 million barrels per day (510×10^3 to 520×10^3 m3/d) of oil were shipped through the Bab el-Mandeb, a narrow waterway between Eritrea, Yemen, and Djibouti that connects the Gulf of Aden with the Red Sea.
As of August 2003, about 80% of the population was without electricity, which was available only in the larger cities and towns, although the government was constructing additional electrical distribution lines. In 2002, net electricity generation was 243 GWh, of which 100% came from fossil fuels. In the same year, consumption of electricity totaled 226 GWh. As of August 2003, Eritrea had about 60 MW of diesel-fired generating capacity.