Ethiopia, Djibouti Agree to Build Gas Pipeline

• Ethiopia, Djibouti Agree to Build Gas Pipeline

Landlocked Ethiopia and Djibouti have signed an agreement to build a 765-kilometre pipeline that will transport Ethiopian natural gas to an export terminal in the neighbouring Djibouti, officials said.

Djibouti’s Energy Minister, Yonis Ali while speaking on this, 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.”

Ethiopia, Africa’s second most populous country, had earlier discovered extensive gas deposits in its eastern Ogaden Basin in the 1970s. Ethiopia’s mining ministry said the pipeline will be built by Chinese company, POLY-GCL Petroleum Investments and Transport who 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.

All but 65 kilometre of the pipeline will be located in Ethiopia, whose government has earlier announced plans to generate $1 billion annually from extraction of natural gas and crude oil deposits.

Ethiopia relies heavily on Djibouti’s ports for exports and imports. 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.