New AGE discovers gas reserve in Ogaden
OCP to source gas, potash locally to produce fertilizer
The Ministry of Mines and Petroleum disclosed that the British energy firm New Age (African Global Energy Ltd) has discovered 1.6 Trillion Cubic Feet of natural gas reserve in the Ogaden basin, Somali Regional State.
State Minister of the Ministry of Mines and Petroleum Guang Tutlam (MD), told The Reporter that New AGE has discovered 1.6 Trillion Cubic Feet of Natural gas in a locality called Elkuran. “We are now working on the gas commercialization. We are looking at ways how to market the gas,” Guang said.
An American company, Greencom, has requested the Ministry of Mines and Petroleum to supply it with natural gas. Greencom has proposed to build a gas processing plant which produces various petroleum products from gas. The company plans to use a Gas-to-Liquid (GTL) technology to change the gas into liquid petroleum products including gasoline and gas oil. The total investment cost is estimated at two billion dollars.
“The GTL technology has been applied in other countries. Technologically, it has been tested,” Guang said. “What Greecom wants from us is the supply of gas for the GTL plant. We have told them to discuss the matter with New Age,” he added.
A Chinese company Poly GCL Petroleum Investments is in the process to extract a natural gas reserve in the Oganden basin. Poly GCL which signed a petroleum development and production sharing agreements which enables it to produce and sell gas reserves in the Calub and Hilala localities. Guang said that Poly GCL is to develop a 4.7 TCF of gas which was discovered earlier. However, Guang said Poly GCL has undertaken exploration work and discovered additional gas reserve. “Now the volume of gas the reserve has increased to 6-8 TCF. But the company is now working to extract the 4.7 TCF gas,” Guang said.
According to the state minister a gas commercialization study has been undertaken by an independent consultant. “The study has been presented to both of us and we have agreed on the marketing study,” he said.
The gas produced from Calub and Hilala gas fields would be transported by a 760 km gas pipeline to a gas treatment plant to be built at the Port of Djibouti. The Chinese plans to change the gas into Liquid Natural Gas (LNG) at the gas treatment plant and export it to China.
An investment protection treaty has been signed by the governments of Ethiopia and Djibouti for the gas pipeline construction. There is also an going negotiation with Poly GCL on the pipeline construction. “The design work will be undertaken and a tender will be floated for the pipe construction. Once the design work is completed the construction work will take three years,” Guang said. Poly GCL hopes to start pumping out the gas by 2021.
But a new gas marketing channel has been proposed. The Moroccan fertilizer giant, OCP, which is building a mammoth fertilizer manufacturing plant in Dire Dawa city has requested the Ethiopian government to supply it with gas which will be used as an input to produce fertilizer.
Samuel Hurkato (PhD), the Minister of Mines and Petroleum, said that agreements would soon be signed for the supply of gas and potash for OCP fertilizer manufacturing plant. “OCP will use potash to be mined in the Afar region and gas from the Somali Region to use the natural resources as inputs for the production of fertilizer,” Samuel said.
The minister said that the mining sector would focus on producing industrial inputs. “We have many industrial minerals. This is an import substitution. If we supply inputs to the fertilizer company which would cover 50 percent of the local fertilizer demand that means we are supporting the agriculture sector,” Samuel said.
According to the minister the Ethiopian government has given due emphasis to the mining sector which was not the case in the past. “It was only the agriculture and manufacturing sectors that were given due attention. The mining sector will now support the agriculture and manufacturing sectors. We are going to produce minerals to be used as inputs for the manufacturing industry,” he said.
In addition to the gas development project Poly GCL has discovered oil reserve in Hilala locality. The company started test production in June 2018. Guang told The Reporter that Poly GCL is conducting well testing to determine the amount of gas reserve. The company has been granted 12-36 months testing period which some petroleum experts have opposed. “36 months testing period is too long. From other countries’ experience it should not exceed six month,” the experts told The Reporter.
Guang said instead of disposing the oil they are selling it to the local cement and glass factories as fuel. “The oil was discovered in the gas wells. The pressure is different. So they should undertake the testing for a long time to determine the pressure and the amount of the reserve,” Guang said.
Covering 350,000 sq. km of arid land, the Ogaden basin is the largest sedimentary basin in Ethiopia found in the Somali Regional State.