Saturday, September 23, 2023
PoliticsEthio-Djibouti natural gas pipeline agreement a step closer to ratification

Ethio-Djibouti natural gas pipeline agreement a step closer to ratification

The House of People’s Representatives (HPR) has received a draft bill to ratify an agreement entered by the government of Ethiopia with Djibouti, to build a pipeline for natural gas.

In its 4th regular session on Thursday, the House deliberated on the draft bill, after the Ministry of Mines and Natural gas, of the two nations, signed a deal to build USD four billion worth natural gas pipeline to transport Ethiopian gas to an export terminal at the Port of Djibouti located in the Red Sea, 10 months ago.

It is to be recalled that Ethiopia found extensive gas deposits in its Eastern Ogaden Basin in the 1970s. China’s POLY-GCL Petroleum Investments has been developing the Calub and Hilala fields, ever since signing a production sharing deal with Ethiopia in 2013.

The agreement between Djibouti and Ethiopia comes after POLY-GCL signed a Memorandum of Understanding with Djibouti to invest the stated USD 4 billion, to build the natural gas pipeline, a liquefaction plant and an export terminal to be located in Damerjog, near the country’s border with Somalia.

In February, it was disclosed that Ethiopia expects over USD one billion in income annually by selling gas to the global market.

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The 700-kilometer-long pipeline will be installed inside Ethiopia’s territory while 65 kilometers will be within Djibouti’s territory.

In addition, a year ago, Ethiopia has awarded the production of Calub gas for the Chinese company Poly -GCL Petroleum Ltd, which has been on test production of 400 barrels of liquidized gas a day. Meanwhile, the project has faced some challenges following the crisis in the Somali region which was then led by Abdi Mohammed a.k.a. Abdi Illey, now facing trial for human rights violations.

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 Tons Per Annum (mtpa) liquefied natural gas (LNG) plant and export terminal.

The initial construction is expected to take three years to complete, while the plant’s capacity could eventually be extended to 10 mtpa. POLY-GCL estimates the cost of this construction at USD 4 billion.

Ethiopia is expected to join the list of 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 of the country.

After a moderate revision as well as a Q & A session, the House referred the draft bill to the Foreign Affairs Standing Committee and Peace Affairs Standing Committee for further revision.

In addition to the above bill, the House, in the same session has also deliberated on a draft bill termed ‘A proclamation issued to provide a system for determination of the division of Federal Subsidies and Joint Revenues.’

The draft bill will establish an autonomous commission with the specific tasks and responsibility as per stated in the proposed provisions.

Chairman of the standing committee, Abebe Gedebo, who explained about the proposed bill said that the revision of the proclamation is required, after identifying some challenges during the implementation of the proclamation.

After debates, the House has referred it to the Law, Justice and Democracy Affairs Standing Committee and the Revenue, Budget and Finance Affairs Standing Committee for further revisions.

The draft bill was prepared by the Law, Justice and Democracy Standing Committee of the House.

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