Government Reviews U.S. $1.4 Billion Petroleum Pipeline Proposal

Government Reviews U.S. $1.4 Billion Petroleum Pipeline Proposal Petrol Pipeline

The project would take two years to complete

Ethiopia's government is going over a proposed project to build a petroleum pipe-line from the Port of Djibouti, which could cost 1.4 billion dollars and take two years to construct.

The news was disclosed during the "Powering Africa: Ethiopia Meeting," which took place at the Radisson Blu Hotel, on November 21, 2014. The meeting was organised by the UK-based company Energy Net Ltd, which "organises a global portfolio of investment meetings, conferences and energy forums, focused specifically on the power and industrial sectors across Africa," according to its website.

Officials at the Ministry of Water, Irrigation & Energy (MoWIE), confirmed that the proposal had been submitted and they would look at it before deciding to discuss it further with other stakeholders, such as the Ministry of Finance & Economic Development (MoFED), the Ministry of Foreign Affairs (MoFA), and Ministry of Transport (MoT).

The proposal was made by Black Rhino Group and MOGS (Mining, Oil & Gas Services). Black Rhino Group is owned by Blackstone, a large Wall Street private equity fund, and MOGS is owned by Royal Bafokeng Holdings, a South African investment group.

Brian Herlihy, CEO and founder of Black Rhino, made a presentation of the proposal at the Powering Africa meeting.

The companies are proposing building around 550Km of pipeline, carrying oil directly from the vessels at the port to a storage facility in Awash, by-passing the congested port and road from Djibouti. The trucks would then distribute fuel from Awash to the rest of the country, including Addis Abeba.

The proposal was submitted six months ago to the governments of Ethiopia and Djibouti. The government of Djibouti was happy, Brian said. If the Ethiopian government gives a green light to the project the company will proceed to study the environmental and engineering condition of the construction, according to Brian.

The Djibouti government has told Black Rhino and MOGS that the current port infrastructure is not big enough to meet Ethiopia's long term needs. Currently, the demand for refined fuels in Ethiopia is growing at 10pc a year.

The project is expected to reduce the supply problem caused by truck shortages, as well as reduce the cost of transport.

Using trucks for oil transport is very expensive, not the least of which is because of the fuel consumption by the trucks themselves, says Demelash Alamaw, assistant to chief executive at Ethiopian Petroleum Supply Enterprise (EPSE).

Last year Ethiopian Petroleum Supply imported 2.6 million tonnes of fuel. On the current budget year it has plans to import 2.9 million tonnes, according to the EPSE. As demand for petroleum grew by an average 10pc, an expert in petroleum logistics says that the transport supply has not grown accordingly, suggesting that it is important to use alternative transport.

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