Djibouti and Ethiopia have signed $1.55 billion deal for the construction of a fuel pipeline between the two countries. The deal was made between the two countries as well as the developers Mining, Oil & Gas Services and Blackstone Group LP-backed Black Rhino Group.
The agreement states that the pipeline will be 550 km which will be used to transport diesel, gasoline and jet fuel from Damerjog port in Djibouti to Awash terminal in central Ethiopia. The completion of the pipeline is scheduled for 2018. The project also includes an import facility with the storage capacity of 950,000 barrels in the Djibouti port, which will be linked, to the 20-inch diameter pipe leading the depot in Ethiopia. The pipe will be capable of handling 240,000 barrels of fuel a day.
“The pipeline will increase energy security, aid economic development and reduce harmful emissions,” Brian Herlihy said, the Chief Executive Officer of Black Rhino.
Currently, fuel products are transported via 800 km of roads from Djibouti port to the Ethiopian depot travelling through mountainous areas. The construction of the pipeline is expected to make the transport of the products for efficient for the two countries.
“The Horn of Africa project will sustain the momentum of economic growth and growing fuel demand in both Djibouti and Ethiopia by enabling high-quality, consistent energy supply at reasonable cost points,” Mining Oil and Gas Services Chief Executive Officer Errol Gregor said.
The Horn of Africa is a peninsula in Northeast Africa. The area is the easternmost projection of the African continent. It covers approximately 2,000,000 km2 (770,000 sq mi) and is inhabited by roughly 115 million people of the 4 nations in the region (Ethiopia: 96.6 million, Somalia: 10.4 million, Eritrea: 6.4 million, and Djibouti: 0.81 million).