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Parliament approves USD 4 bln natural gas pipeline deal

Parliament approves USD 4 bln natural gas pipeline deal

The House of People’s Representatives (HPR) has approved an agreement that was signed between the Government of Ethiopia and Djibouti, to install a cross-border pipeline in order to transport natural gas.

The Ministry of Mines and Natural gas of the two nations signed the deal to build USD four billion worth natural gas pipeline, to transport Ethiopian gas to an export terminal at the Port of Djibouti on the coast of the Red Sea.

During the 7th regular session of the House held on Tuesday, MPs held discussions on a report presented by the Natural Resource, Irrigation and Energy Standing Committee, to whom it was referred to in November, for revisions.

Dubbed “The agreement between the government of Ethiopia and Djibouti on the transit of natural gas pipeline ratification proclamation,” the deal grants Ethiopia full ownership and title over the natural gas in the pipeline.

Explaining the draft bill to help approve the agreement signed, Fetiha Yusuf, the chairwoman of the Standing Committee told the House that the draft bill was well-crafted and based on international standards that will insure the benefits of the signatory parties. In addition she noted that this will generate a much needed foreign currency.

She further elaborated that the agreement consists of the necessary modalities that will enable the two countries resolve any challenges that may occur in the future. Furthermore, it contains provisions to take cases to international tribunes should they fail to resolve possible disputes.

Having heard the standing committees report, MPs have endorsed the bill unequivocally.

It is to be remembered 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 there, since signing a production sharing deal with Ethiopia in 2013. It was even announced that the volume of the discovery, is estimated to be up to 7 to 8 billion cubic trillion feet (TFC) in the Somali regional state.

The agreement between Djibouti and Ethiopia comes more than a year after POLY-GCL signed a Memorandum of Understanding with Djibouti to invest USD 4 billion to build the 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 annual income by selling gas to the global market.

According to the deal, the 700 kilometer stretch of the pipeline will be installed in Ethiopian territory, while 65 kilometers of the pipeline will be built within Djiboutian territory.