The Blue Nile Basin, a Late Palaeozoic - Mesozoic NW-SE trending rift basin in central Ethiopia, is filled by up to 3000 m of marine deposits (carbonates, evaporites, black shales and mudstones) and continental siliciclastics. Within this fill, perhaps the most significant source rock potential is associated with the Oxfordian-Kimmeridgian Upper Hamanlei (Antalo) Limestone Formation which has a TOC of up to 7%. Pyrolysis data indicate that black shales and mudstones in this formation have HI and S-2 values up to 613 mgHC/gCorg and 37.4 gHC/kg, respectively. In the Dejen-Gohatsion area in the centre of the basin, these black shales and mudstones are immature for the generation of oil due to insufficient burial. However, in the Were Ilu area in the NE of the basin, the formation is locally buried to depths of more than 1,500 m beneath Cretaceous sedimentary rocks and Tertiary volcanics. Production index, T-max, hydrogen index and vitrinite reflectance measurements for shale and mudstone samples from this areas indicate that they are mature for oil generation. Burial history reconstruction and Lopatin modelling indicate that hydrocarbons have been generated in this area from 10Ma to the present day. The presence of an oil seepage at Were Ilu points to the presence of an active petroleum system. Seepage oil samples were analysed using gas chromatography and results indicate that source rock OM was dominated by marine material with some land-derived organic matter. The Pr/Ph ratio of the seepage oil is less than 1, suggesting a marine depositional environment. n-alkanes are absent but steranes and triterpanes are present; pentacyclic triterpanes are more abundant than steranes. The black shales and mudstones of the Upper Hamanlei Limestone Formation are inferred to be the source of the seepage oil. Of other formations whose source rock potential was investigated, a sample of the Permian Karroo Group shale was found to be overmature for oil generation; whereas algal-laminated gypsum samples from the Middle Hamanlei Limestone Formation were organic lean and had little source potential