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China's POLY-GCL completes gas appraisal wells in S-E Ethiopia

[ADDIS ABABA] China's POLY-GCL Petroleum Group Holdings Ltd has finished drilling two appraisal wells in Ethiopia's southeast and will soon know the size of gas deposits there, a senior Ethiopian official said.

Ethiopia says the wells in the Calub and Hilala fields in the Ogaden Basin should show deposits of 4.7 trillion cubic feet of liquid natural gas (LNG) and 13.6 million barrels of associated liquids. The deposits were discovered in the 1970s. "They have finished drilling and are now conducting tests on the reservoir. Tests will conclude soon," State Minister of Mines, Petroleum and Natural Gas, Wakgari Furi, said. "We may start gas production in 2016. They are working fast," he told Reuters in an interview late on Thursday.

POLY-GCL, a joint venture between state-owned China POLY Group Corporation and privately owned Hong Kong-based Golden Concord Group, plans to drill five wells in Ethiopia's southeast, including three wildcat exploration wells.

The project involves developing the fields and building a pipeline from landlocked Ethiopia to the coast of neighbouring Djibouti, where it will build an LNG plant and export terminal, according to a company website.

POLY-GCL estimates the cost at US$4 billion and initially expected to start LNG production by mid-to-late 2018 at 3 million tonnes a year at first, rising to 10 million tonnes.

Foreign firms have acquired licences to explore in more than 40 blocks in Ethiopia over the past four years, mostly in the southeast near Somalia.

Africa's eastern seaboard could soon become a major global LNG producer, with other planned projects based on big gas finds made in Tanzania and Mozambique.

POLY-GCL was set up to develop oil and gas in Ethiopia, and aims to expand to other countries. It signed a deal with Ethiopia's Mines Ministry in late 2013 to develop both fields in the Ogaden Basin. It also has eight other exploration blocks.