China’s POLY-GCL, Djibouti ink agreement for LNG project

According to Reuters, China’s POLY-GCL Petroleum Group Holdings Ltd and Djibouti have signed a memorandum of understanding (MoU) in order to make an investment of $4 billion in a natural gas project in the Horn of African nation of Djibouti.

This project incorporates a natural gas pipeline, a liquefaction plant and an export terminal which will be located in Damerjog, in the Djibouti’s border with Somalia.

According to Energy Minister, Yonis Ali Guedi, new discussion regarding the project will take place the next six months, following the signing of the MoU, with the construction of the project expected to begin next year.

The project’s pipeline will be able to transport 2 billion cubic meters of natural gas a year from Ethiopia to Djibouti, Reuters mentioned, adding that in 2016 POLY-GCL completed drilling appraisal wells for gas deposits in Ethiopia, a project that associates with the export terminal plans Djibouti.

Furthermore, the liquefaction plant will have a capacity of 10 million tonnes per year of LNG.

However, in the beginning, the production will be just 3 million tonnes per year, Reuters mentions.

In the beginning of 2017, Djibouti initiated the construction of a project which was characterized as Africa’s largest free trade zone.

This project is part of China’s attempt to expand trade routes, with the project ‘One Belt, One Road’, Reuters concluded.