Gas Reserve Discovered in Ethiopia By British Company

Posted on : Thursday , 30th May 2019

NewAGE has discovered 1.6 trillion cubic feet of natural gas in a locality called Elkuran. The company has made the discovery near the site where the Chinse Poly GCL has started test gas production a year ago. Currently the Adigala and Ogaden blocks in Ethiopia are being operated by NewAge.

Guang Tutlam (MD), the State Minister of Ethiopia’s Ministry of Mines and Petroleum. “We are now working on the gas commercialization and looking at ways to market the gas,” said the state Minister.

African Global Energy in its official website stated that development options in Ogaden are currently under review and include small-scale domestic projects and LNG export with nearby operator Poly GCL, the Chinese company, that is testing production in the area.

An American company, Greencom, has requested the Ministry of Mines and Petroleum to supply it with natural gas. Greencom has advocated 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,“ It said.

“The GTL technology has been applied in other countries. Technologically, it has been tested. 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.

NewAge has important positions in the Adigala Basin in the north and the Ogaden Basin to the south of the country. It is recollected that in the same Ogden area of Somali region of Ethiopia, a Chinese company, Poly GCL Petroleum Investments, has been started test production of gas about a year ago.

Poly GCL Petroleum Investments, a Chinese company is undertaking 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.

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.

The Minister of Mines and Petroleum, Samuel Hurkato (PhD), said that agreements would be signed soon 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.” 

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 permitted 12-36 months testing period which some petroleum experts have opposed. The experts are of the opinion that it should not exceed six month as per the experience from other countries.

Guang informed that rather than disposing the oil they are selling it to the local   glass and cement 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.