Abiy Ahmed launches first phase of Ogaden LNG project

On October 2, Ethiopia’s Prime Minister Abiy Ahmed officially inaugurated the first phase of the Ogaden Liquefied Natural Gas (LNG) project in Calub, Somali region, which has an annual production capacity of 111 million litres. Prime Minister Abiy also launched the second phase of the project, which is expected to increase production by 1.33 billion litres per year and support the generation of 1,000 megawatts of electricity.

Sharing the announcement on his official X account, Prime Minister Abiy Ahmed described the event as “a historic occasion for all Ethiopians.” He stated, “Today marks a historic occasion for all Ethiopians as we lay the foundation stones for two transformative projects: the urea fertilizer plant — to be developed by Ethiopian Investment Holdings (EIH) in partnership with the Dangote Group — and the Gode Oil Refinery, to be constructed by Golden Concord Group Limited (GCL).”

Abiy emphasized that these initiatives “represent more than industrial progress. They embody our shared responsibility to harness opportunities, strengthen cooperation, and promote peace.” Concluding his message, he urged all Ethiopians “to continue mobilizing in unity for progress. By doing so, we elevate Ethiopia’s presence on the global stage in a way that honors the true spirit of our Ethiopian identity.”

The Gode Oil Refinery, which GCL will develop, is expected to process 3.5 million tons of crude oil annually, sourced from the Hilala oil field. On the other hand, a urea fertilizer plant, to be developed by EIH in collaboration with the Dangote Group, will have an annual output of three million tons, fed by natural gas from the Calub fields via a 108 km pipeline.

Aliko Dangote, founder of the Dangote Group and retired chairman and director as of July, said at the event: “It is my firm belief that with this project, within five years, Ethiopia will become the leading agricultural country on the African continent,” adding “We partner only with serious governments, and when we talk about serious governments, Ethiopia is at the top of the list.”

In August 2025, EIH and the Dangote Group signed a $2.5 billion joint development agreement for the development of fertilizer complex, with EIH holding a 40% stake and Dangote Group 60%. Founded in 1981 by Aliko Dangote, the Dangote Group is one of Africa’s largest industrial conglomerates, with operations across cement, energy, and manufacturing.

Significant deposits of oil and natural gas have been discovered in the Ogaden Basin, situated in the Somali regional state. This area spans approximately 350,000 square kilometers and is considered Ethiopia’s most promising hydrocarbon zone, especially in the Calub and Hilala fields.

Ethiopia’s proven natural gas reserves are estimated at 2,800 petajoules (2.6 trillion cubic feet)—enough, according to the Ministry of Mines, to supply fertilizer production, electricity generation, and other petroleum products for more than five decades.

Gas discoveries in Calub, Hilala, and nearby fields date back to the 1970s, but commercial development has been hindered by political instability, limited infrastructure, and security concerns. Several international companies, including Sweden’s Lundin, have conducted exploration activities over the decades

Despite these vast resources, development has historically lagged. A major export-oriented project, involving a 767 km pipeline linking the Ogaden fields to Djibouti, was cancelled in 2022 due to financing challenges and slow implementation. The Ethiopian Energy Outlook 2025 later confirmed the project’s cancellation.

The export project, initially awarded to Poly-GCL Petroleum Group in 2013, suffered repeated delays. The company’s license was revoked in 2022 by Ethiopian government for missed deadlines but reinstated in June 2024 after showing partial progress. Although an American firm confirmed seven trillion cubic feet in reserves, the export model was ultimately deemed unfeasible. Similarly, a 2021 joint venture with Morocco’s OCP Group to build a fertilizer plant in Dire Dawa also stalled.

Ethiopia currently spends over $4 billion annually on imported petroleum products. The government’s new strategy aims to reduce import dependency by developing, processing, and utilizing domestic natural gas resources.

However, governance and security challenges remain. The Somali Region has long experienced conflicts involving the Ogaden National Liberation Front (ONLF). Although the group laid down arms and signed a peace agreement with the federal government in 2018, internal divisions have recently emerged. Some factions continue to oppose the federal government, and the group has accused Addis Ababa of interfering in its internal affairs.

Economically, the Ogaden gas and LNG projects stand at the heart of Ethiopia’s push for industrialization and energy diversification. Tapping into its own natural gas reserves could help the country cut costly fuel imports while creating thousands of jobs. These efforts are part of a broader wave of national ambition. In just the past few weeks, Ethiopia has inaugurated the Grand Ethiopian Renaissance Dam, a multi-billion-dollar project expected to generate over 5,000 megawatts of electricity, and signed a deal with Russia to build its first nuclear power plant.