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BusinessPoly-GCL to start extracting gas next month

Poly-GCL to start extracting gas next month

The Chinese company which is engaged in oil and gas exploration and development project in the Ogaden basin, Poly-GCL Petroleum Investments Limited, is going to start extracting natural gas at the Calub gas field in the Ethio-Somali Regional State next month.

Reliable sources told The Reporter that Poly GCL for the first time in the history of Ethiopia will start pumping out the natural gas reserve at Calub locality which is estimated at 2.7 Trillion Cubic Feet (TCF). Sources said the Chinese firm, at the initial phase, will extract the natural gas condensate at a small scale. “The gas production will start as a pilot project next month. The company will supply the gas condensate for local manufacturing industries such as cement factories,” sources told The Reporter. Eight gas production wells have been drilled and made ready for production in Calub.

According to sources, the gas condensate will be transported by fuel tanker trucks and will be delivered to energy intensive factories like cement factories. “The gas will replace the fuel oil (furnace oil) which is currently imported. Eventually, the locally produced gas condensate can fully replace the imported fuel oil. And this would be play its own share in the country’s strides to implement import substitution programs. It will help the government in addressing the foreign currency crunch,” sources said.

Poly-GCL, which signed petroleum exploration and development agreement with the then Ministry of Mines in November 2013, has been prospecting for oil and gas reserve in a vast exploration area in the Ogaden basin. The company is also trying to develop the Calub and Hilala gas fields at large scale.

The Calub and Hilala gas fields were discovered by an American company called Tenneco in 1972. Former Soviet Union oil firm, Soviet Petroleum Exploration Expedition (SPEE), which was prospecting for oil in the Ogaden basin in 1980s, confirmed the gas reserves in Calub and Hilala localities estimated at four TCF.

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Poly-GCL has conducted 3D and 2D seismic surveys and drilled some appraisal and exploration wells in the concession area. Poly GCL has subcontracted another Chinese company, BGP Geo Services, which has been collecting seismic data in the license area covering 93,000 of arid land. The company has made additional oil and gas discoveries. The natural gas reserve is now estimated at 8 TCF.   

 In addition to the ongoing exploration work Poly-GCL is trying to exploit the natural gas reserves in the Calub and Hilala gas fields. Poly GCL planned to extract the gas reserve in Calub and Hilala and export it via a gas pipeline that would be constructed from the gas fields to all the way to the port of Djibouti. Poly GCL has signed agreement on the pipeline construction with the governments of Ethiopia and Djibouti. According to the Ministry of Mines, Petroleum and Natural Gas, the Ethiopian government is negotiating with the government of Djibouti on the pipeline construction. “It is an inter-governmental negotiation,” the Ministry said.

According to the ministry, Poly GCL will build an LNG plant in Djibouti that would change the gas into liquid natural gas which will be exported to China with special LNG vessels. The total cost of the gas development project is estimated at four billion dollars. The Ministry said Poly GCL would start exporting gas by 2021.

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