The Ministry of Mines, Petroleum and Natural Gas and the Chinese oil and gas company, Poly GCL, are moving the Ogaden gas development project forward.
The ministry has established a committee that oversees the construction of the gas export pipeline all the way from the Calub gas field to the port of Djibouti.
Poly GCL has entered into an agreement with the Ethiopian government to develop the Calub and Hilala gas fields in the Ogaden basin in 2013. Poly GCL has been undertaking various preparation work to build a gas treatment plant and a gas pipeline that would be used to export gas to China and other international markets via the Port of Djibouti. The Ethiopian and Djiboutian governments have signed a Memorandum of Understanding (MoU) on the planned gas pipeline construction.
Tolossa Shagi, the minister of Mines, Petroleum and Natural Gas, told The Reporter that the ministry has established a committee that will oversee the construction of the gas pipeline which would cost four billion dollars. Tolossa said that the committee in collaboration with Poly GCL is working on the facilitation of the gas pipeline construction. The committee is tasked with dealing the details of the implementation of the gas pipeline construction project.
“The committee will study the trails in which the pipe will be lined, the quality of the pipes and the environmental impact of the project. The project is moving forward,” Tolossa said.
In two appraisal wells drilled in Calub and Hilala gas fields last year Poly GCL found out promising results showing a much larger gas reserve than originally anticipated.
Previously, 10 wells were drilled in the Calub gas fields out of which eight were made ready for gas production. The Calub gas field is located 1200km south-east of Addis Ababa. Hilala is located 80km further to the east. The total gas reserve is estimated at 118 billion cubic meters. The gas fields were first discovered by an American company in 1972 and the gas reserves were confirmed by Russian company, SPEE, in the 1980s.
Sources told The Reporter that the new testing results may increase the gas reserve estimate made many years ago. According to sources, PLOY-GCL is preparing a gas field development plan based on the revised reserve estimate.
In November 2013, Poly GCL singed petroleum development agreement with the Ethiopian Ministry of Mines, Petroleum and Natural Gas that would enable the company to develop the Calub and Hilala gas fields located 1200km south-east of Addis Ababa. The company has also agreed to search for oil and gas in eight exploration blocks in the Ogaden with a total area of 117,151 sq.km.
Poly-GCL plans to construct a 830km gas pipeline all the way from the Calub and Hilala gas fields in the Ogaden basin to the Port of Djibouti and to build a gas treatment plant at the Djibouti port. The company plans to produce three million tons of Liquefied Natural Gas (LNG) annually and mainly export it to China through the port of Djibouti. The total amount of natural gas the company plans to pump out from the two gas fields each year is 4 billion cubic meters. The total investment cost of the gas development project is estimated at four billion dollars. The company hopes to start commercial gas production in 2019. The Ministry of Mines, Petroleum and Natural Gas expects the company to launch production in the end of the second GTP term.
Encouraged by the well testing results Poly GCL is expediting the gas development project. The cornerstone for the gas export terminal was laid in Djibouti in March 2016. Sources told The Reporter that construction of the pipeline will commence in 2017 and will be completed within three years.
Poly-GCL is also acquiring 3D and 2D seismic data from its concession in the Ogaden basin. The company which imported two drilling rigs would drill new exploration wells based on the seismic data collected from the concession area. In addition to the planned gas development project, the company hopes to strike new oil and gas deposits.