Ethiopia, Djibouti sign gas pipeline construction deal

The construction will be led by Chinese company Poly-GCL Petroleum Group Holdings Limited, a subsidiary of Golden Concord Group Limited.

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Ethiopia and Djibouti have signed a deal for the construction of a 767km gas pipeline between Ethiopia’s eastern Ogaden Basin and an export terminal on the Red Sea.

The construction will be led by Chinese company Poly-GCL Petroleum Group Holdings Limited, a subsidiary of Golden Concord Group Limited –a Hong Kong based diversified energy conglomerate that specializes in a range of activities from green energy generation to downstream activities including transport, storage and terminal management.

The company made a sizeable gas discovery in March 2018 in the Ogaden basin, with estimated reserves between six and eight trillion cubic feet. The field went into production in July 2018.

The total cost for the project has not yet been disclosed but according to Djibouti’s Energy Minister, Yonis Ali Guedi, It is the most expensive project ever built in the Horn of Africa region.

In a statement, President of the African Petroleum Producers Organisation (APPO), Emmanuel Ibe Kachikwu disclosed that US$2bn is needed to fund critical infrastructure in Africa’s energy sector, and called for enhanced collaboration between countries.

Ethiopia found extensive gas deposits in its eastern Ogaden Basin in the 1970s and China’s POLY-GCL Petroleum Investments has been developing the Calub and Hilala fields there since signing a production sharing deal with Ethiopia in 2013.

The agreement between Djibouti and Ethiopia comes more than a year after POLY-GCL signed a memorandum of understanding with Djibouti to invest $4 billion to build the natural gas pipeline, a liquefaction plant and an export terminal to be located in Damerjog, near the country’s border with Somalia.

It was envisaged that production would start in 2018, but the Ethiopian government said that was now likely to happen in 2023.

Africa’s eastern seaboard could soon become a major global producer of liquefied natural gas, with other planned projects based on big gas finds made in Tanzania and Mozambique.