Ethiopia Signs Second-Phase LNG Development Deal for Ogaden Gas Field

Addis Abeba — Chinese companies GCL Group and Jurong Group have signed an agreement to develop the second phase of a liquefied natural gas (LNG) project at Ethiopia's Calub gas field in the Somali Region, as the government seeks to expand commercial use of the country's natural gas reserves.

The agreement, signed on 16 October at the Ministry of Mines in Addis Abeba in the presence of Mines Minister Alemtsehay Paulos, covers engineering, construction and natural gas liquefaction and processing services. It follows a strategic cooperation framework signed by the two companies in May 2026 and the commissioning of the project's first phase in October 2025.

According to Seetao, the first phase consists of a modular LNG facility designed to process 200,000 cubic metres of natural gas daily, producing approximately 50,000 metric tonnes of LNG annually, primarily for domestic industrial consumers. The second phase is intended to increase production and serve international markets, although the companies have not disclosed the contract value, additional processing capacity or completion timeline.

The agreement comes amid renewed efforts to commercialise the Ogaden Basin's gas resources after years of delays. In March 2026, GCL and Dangote Group signed a reported $4.2 billion, 25-year gas supply agreement for a urea fertiliser complex in Gode, with plans to transport gas from Calub through a pipeline of approximately 108-110 kilometres.

Poly-GCL, associated with GCL's wider corporate group, has operated in the basin since 2013 under production-sharing agreements covering the Calub and Hilala fields. Ethiopia's government terminated the company's contracts in September 2022 following disputes over capital registration, outstanding fees and delays in development, before reversing the decision in June 2024.

In August 2022, Ethiopia received its first gas reserves certificate, confirming an estimated seven trillion cubic feet of natural gas in the Ogaden Basin, according to a study by Netherland, Sewell & Associates.

Despite the renewed investment push, export arrangements for the LNG project remain unclear. Ethiopia is landlocked, and earlier proposals to transport gas to Djibouti for export have not resulted in a publicly confirmed export route for the second phase. The agreement's financing, delivery schedule and intended international buyers have also not been announced.

Read the original article on Addis Standard.