Ethiopia has begun construction of the $2.5 billion Gode oil refinery in the Somali Regional State. The facility is expected to produce 3.5 million tonnes of refined fuel annually. Moreover, it is to be developed by China’s Golden Concord Group Limited (GCL). They are to undertake the project in partnership with Ethiopian Investment Holdings. Once complete, it will process crude oil and condensate from the Hilala oil field. Government officials also noted the project is aimed at reducing the country’s dependence on imported petroleum products.
The country spends approximately five billion US dollars annually. Prime Minister Abiy Ahmed who laid the foundation stone on Monday described the launch as a significant milestone. “Today marks a historic occasion for all Ethiopians as we lay the foundation stone for two transformative projects,” he said. “The refinery and fertilizer plants represent more than industrial progress. They are also a demonstration of our responsibility to harness opportunities, strengthen cooperation, and promote peace,” he also noted.
Project Factsheet
Significance:
- Ethiopia’s first large downstream oil factory in the Somali Regional State.
- To have the capacity to generate 3.5 million tonnes of refined fuel annually.
- To lower Ethiopia’s $5 billion yearly expense of importing fuel.
- To improve energy security and alleviate foreign exchange pressures.
Infrastructure:
- Located in Gode, in the Ogaden Basin which contains substantial oil and gas reserves.
- Will also upgrade Hilala oil field’s crude oil and condensate.
- With proposals to serve the regional and local markets.
- Also backed by a 3 million-tonne-per-year urea fertilizer factory to be produced with Calub natural gas.
Developer/Consortium:
- To be developed by China’s Golden Concord Group Limited (GCL).
- To also be implemented with the assistance of Ethiopian Investment Holdings.
- To be funded by Ethiopia’s 10-year development plan for industrial growth.
- Inaugurated by Prime Minister Abiy Ahmed in 2025.
Funding/Timeline:
- Total investment estimated at $2.5 billion.
- Started building in 2025 with phased releases.
- Refinery also projected to be a key element of Ethiopia’s energy and industrial plan.
- Final goal to export fuel and fertilizers to surrounding countries.
The State of Affairs Regarding the Gode Oil Refinery
The Gode oil refinery is expected to take advantage of the Somali region’s Ogaden Basin vast oil reserves. It has been the focus of oil and gas exploration for more than a century as natural oil seeps were documented as early as 1860. US-based Tenneco also discovered the large natural gas reserves at Calub and Hilala in the 1970s. GCL entered Ethiopia in 2013, taking over concessions at Calub and Hilala. The company also oversaw limited crude output in the Somali region in 2018, though exports did not take off. The Gode project is the first major downstream facility to break ground in the region.
There are also plans to supply domestic markets and neighboring countries. Officials said the refinery forms part of Ethiopia’s 10-year development plan, which prioritizes industrial growth and infrastructure. It is also expected to cut fuel import bills and reduce pressure on foreign exchange reserves. Alongside the refinery, Abiy also laid the foundation stone for the Gode fertilizer plant. The plant is to be constructed in partnership with Nigeria’s Dangote Group. Once done, the facility is expected to produce three million tonnes annually using natural gas from the Calub field.
