Djibouti & Ethiopia Embark on $4-Billion Gas Project

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Djibouti saw the laying of the foundation stone ceremony for its planned gas project. The project is comprised of a natural gas pipeline, a LNG plant, and an export terminal at Damerjog. The project will allow Ethiopia to export gas to China and support socio-economic development across the region.

The new 700-km pipeline will transport up to 12 Bcm of natural gas a year from Ethiopia to Djibouti. The LNG plant will have capacity to produce up to 10 mtpa upon completion.

The project, which will be funded by Chinese firm POLY-GCL Petroleum Group Holdings Ltd, will cost approximately $4 billion. Construction work is expected to start shortly and will take three years to complete.

The Djiboutian Minister of Energy, Ali Mahmoud Yacoub, said, “The mega gas project involves three countries – Djibouti, Ethiopia and China – which have agreed to work together in order to make this project successful and operational as soon as possible. The foundation stone laying ceremony follows the signing of the Framework Agreement between Djibouti and POLY-GCL in October 2014, the Protocol Agreement between Djibouti and Ethiopia in February 2015, and the Heads of Agreement between Ethiopia and POLY-GCL in September 2015.

“Djibouti sits at the crossroads of one of the busiest shipping routes in the world, linking Europe, the Far East, the Horn of Africa and the Gulf. It is a natural gateway for Africa, providing sea, air, rail and road links.

“The new pipeline and associated facilities form part of the Government’s plan to develop infrastructure across the country and will lead to closer economic ties with Ethiopia.

“This project reinforces Djibouti’s position as a commercial and regional economic hub and will expand the capacity of its sea ports. It is also a great opportunity to strengthen the regional integration policy. Indeed, both Djibouti and Ethiopia seek to extend this policy to the energy sector.”

Barton Yu, Chairman and President of POLY-GCL, said, “This is an important energy project for POLY-GCL Petroleum Group in our endeavor to develop mutually beneficial cooperation with the Governments of Djibouti and Ethiopia. It will enhance the well-being of the Djiboutian and Ethiopian peoples, while creating a positive impact on China’s energy security.”

The mega gas project will become the second major joint energy infrastructure project between Djibouti and Ethiopia. In September 2015, the two countries signed a $1.5-billion agreement to construct a 550-km refined petroleum products pipeline linking Djibouti’s ports to the Awash terminal in central Ethiopia.

Scheduled for completion in 2018, the petroleum pipeline will be built by Black Rhino Group and Mining Oil & Gas Services.

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