The government of Ethiopia and Djibouti has signed a deal to build a 765km pipeline to transport gas from the landlocked state to Djibouti, partly bordered by the red sea.
The agreement which was signed between Minister of Ethiopia’s Mines and Petroleum Samuel Urkato and Djibouti’s Energy and Natural Resources Yonis Guldi, states that 700km pipeline will be installed in Ethiopian Territory while the remaining 65km will be within Djibouti territory.
The pipeline is expected to transport up to 12 million cubic meters of gas from the Ethiopian hinterland to the coast of neighboring Djibouti, where it will build a 3 Metric Tonnes Per Annum (mtpa) liquefied natural gas (LNG) plant and export terminal.
The deal comes more than 40 years after Ethiopia found extensive gas deposits in its south eastern Ogaden Basin. The country awarded production of Calub gas for the Chinese company Poly -GCL Petroleum Ltd, where the company has been developing the Calub and Hilala fields since signing a production sharing deal with Ethiopia in 2013.
When completed, the pipeline will enable Ethiopia sell its gas resource from Calub and Hilala fields via Djibouti Port. Ethiopia also expects over one billion dollars annual income by selling gas to the global market.
Initial construction is expected to take three years to complete. The plant’s capacity could eventually be extended to 10 mtpa. It is estimated that the cost of this construction will be US $4bn.
Meanwhile, Ethiopia is expected to join the major natural gas producers when it is going to start extraction of the recently found vast natural gas reserve in Arba Minch in the Southern part.