Chinese Company To Construct Oil, Gas Pipeline Stretching From Ethiopia To Djibouti

The Chinese petroleum company, which recently signed a petroleum production sharing agreement (PPSA) with the Ethiopian Ministry of Mines (MoM) to develop the gas filed at Ogaden, signed a Memorandum of Understanding (MoU) on Wednesday January 8, with the government of Djibouti that will allow the company to construct two pipe lines stretching from Ethiopia to Djibouti, Capita reported.

The deal comes after strong preliminary studies showing that oil and gas might be discovered in the country’s eastern region.

GCL Poly Petroleum Investment that signed a deal with Ethiopia in November 2013 to develop gas reserves at Calub and Hilala has signed a MoU with Ministry of Energy in charge of Djibouti’s Natural Resources that will allow the company to transport gas and oil products to the port.

The framework document of the agreement will determine the terms allowing the two pipelines, oil and gas, to flow to the port from Ethiopia.

The American oil company, Tenneco, was the first to strongly confirm that there was a huge gas reserve in the area 42 years ago. Now other international petroleum companies are finding that the area is rich with natural resources.

According to the information obtained from Djibouti, the new deal between the Chinese firm and Djibouti is exceptional when compared with other companies who have been interested developing Calub and Hilala natural gas fields. For instance most of the companies have been active in the gas field and only expressed their plan to transport the product via pipeline to the port [Djibouti] but no other country was able to reach this kind of agreement with the tiny horn of Africa country, which is the main hub for Ethiopia’s import/export.

Sources at Djibouti told Capital that this agreement also provides for the construction in Djibouti of a liquefaction plant and gas refinery and storage of crude and refined products and a bunkering center in Obock, located on the northern shore of the Gulf of Tadjoura.

Li Wei, representative of the Chinese multinational and Ali Yacoub Mahamoud, Minister of Energy in charge of Natural Resources, signed the MoU at Djibouti.

Currently, several international companies are assessing the oil and natural gas deposits in of Ethiopia. Previously, companies have been focusing on the southeastern part of the country, while latest assessments indicated that oil and gas reserves are also abundant in other parts of Ethiopia.

Source: Capital