The federal government is moving forward with ambitions to produce liquified natural gas (LNG) for household energy consumption by mid 2025, according to the Ministry of Mines.
Golden Concord Ltd (GCL), an energy service provider and manufacturing firm based in Hong Kong, is slated to undertake a three-phase production plan, according to the Ministry’s 2024/25 planning document.
Poly GCL, a subsidiary of the GCL Group, was first granted a concession to explore and produce natural gas in the Somali region in 2013. In June 2018, the Chinese company conducted crude oil production tests in the Calub and Hilala oil fields. Calub has 11 wells – all of which are productive.
Former Mines Minister Takele Uma revoked the concession in 2022 for Poly CGL allegedly falling behind the schedule stipulated in the company’s licensing agreement.
The same year, Netherland, Sewell & Associates, an American firm specializing in petroleum resource analysis, certified the presence of seven trillion cubic feet of natural gas in Ogaden.
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The Ministry reversed its decision in June this year.
The GCL Group is expected to begin producing 180,000 cubic meters of LNG per day by July 2025, according to the planning document.
Officials at the Ministry want to see the company engage in LNG exports by mid-2026, with the construction of roads and other necessary infrastructure at the extraction site scheduled to begin in the coming six months, according to the document.
Sources say there are plans to export LNG to China.
The planning document states that Ethiopia registered more than USD 825 million in investment capital related to the granting of natural gas concessions for investors in 2023/4.
The third phase of production consists of using the natural gas deposits as an input for the government’s long-held ambitions to produce chemical fertilizers domestically. Financial and technological feasibility studies for the venture will be finalized this year, according to the Ministry.
In 2021, the government signed a joint development agreement with the Moroccan OCP Group to establish a fertilizer production plant in Dire Dawa. There have been no indications of progress on the project in the three years since.
The planning document reveals the Ministry has signed an agreement with Wuhuan Engineering Co. Ltd. to conduct a techno-economic study to establish a fertilizer factory that uses natural gas as an input. The feasibility study is expected to be finalized in five months, according to the document.
Feasibility studies for the construction of nearly 600 kilometers of roads linking Jigjiga with Gode via Deghabour and Kebridhar are underway, according to the document. The government is also looking to upgrade the road from Ginir to Gode, it reads.
The federal government has placed a request for project financing from the government of South Korea, reveals the document.
The Ministry is also preparing legal frameworks to govern and regulate the novel natural gas industry. Its experts are working on a policy, proclamation, regulation, and directives, according to Ministry data.
Analysts stress that Ethiopia’s natural gas exploitation should prioritize the use of natural gas as input for fertilizer production, which they say is more essential for the country’s agriculture and food security than household LNG consumption.
Yet, the fertilizer plant also requires potash exploitation in the Afar region, which is also still in the pipeline.
Ethiopia spent USD 1.3 billion on fertilizer imports in 2022, according to the UN COMTRADE database.
Ministry officials declined to respond to queries about the progress of natural gas extraction in the Somali region.
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