Ethiopia, Djibouti seal deal to construct gas pipeline

Ethiopia, Djibouti seal deal to construct gas pipeline
Illustrative picture. PHOTO CREDIT: SHIPS & PORTS archive

Ethiopia and Djibouti have reached an agreement in principle to build a 765 kilometre pipeline to transport Ethiopian natural gas to an export terminal in the neighbouring Horn of Africa nation, officials said.

“It is the most expensive project ever built in the Horn of Africa region.”

“The two parties have reached an agreement in principle to allow them to benefit from the project in an equitable manner,” Djibouti’s Energy Minister, Yonis Ali Guedi said.

Landlocked Ethiopia said the pipeline will be built by China’s POLY-GCL Petroleum Investments and transport gas from fields in the eastern Ethiopian Somali region to Djibouti to be exported from there.

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

The deal 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 last year, but the Ethiopian government said that was now likely to happen in 2020.

Ethiopia relies heavily on Djibouti’s ports for exports and imports. The country additionally hopes that a recent rapprochement with its former province of now independent Eritrea will afford it additional access to the sea.