Prime Minister Abiy Ahmed Thursday launched the project for the construction of the Gode oil refinery in the Somali Regional State, a facility expected to produce 3.5 million tonnes of refined fuel annually.
The refinery, to be developed by China’s Golden Concord Group Limited (GCL) in partnership with the Ethiopia Investment Holdings, will process crude oil from the Hilala oil field.
Speaking at the event, Ahmed said the project is aimed at reducing the country’s dependence on imported petroleum products, which costs the East African country about $5 billion.
“Today marks a historic occasion for all Ethiopians as we lay the foundation stone for two transformative projects,” he said.
The Somali region’s Ogaden Basin, where the refinery will be located, has been the focus of oil and gas exploration for more than a century.
Natural oil seeps were documented as early as 1860, and a U.S. firm Tenneco discovered large natural gas reserves at Calub and Hilala in the 1970s.
During military rule in 1970s, Soviet geologists confirmed more than 100 billion cubic meters of recoverable gas.
Despite multiple attempts by foreign firms in the intervening decades, security concerns and financing shortfalls remained a challenge to build the refinery infrastructure.
GCL entered Ethiopia in 2013, taking over concessions at Calub and Hilala. In 2018, it oversaw limited crude output in the Somali region, though exports did not take off.
The Gode project is the first major downstream facility to break ground in the region, with plans to supply domestic markets and neighbouring countries.
Officials said the refinery forms part of Ethiopia’s 10-year development plan, which prioritizes industrial growth and infrastructure development.
Ahmed also laid a foundation stone for the construction of a urea fertilizer plant in partnership with Nigeria’s Dangote Group.
The facility, which will be built near the refinery plant, is expected to produce three million tonnes of fertilizers annually using natural gas from the Calub field.
MG/as/APA