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POLY-GCL to Start Gas Drilling by July 2016

Source: Reuters 4/16/2016, Location: Africa

Ethiopia expects Chinese firm POLY-GCL Petroleum Group Holdings Ltd to begin drilling for natural gas in development blocks in the southeast by June or July, the mines minister said.

Foreign firms have acquired licences to explore in more than 40 blocks throughout Ethiopia in the past four years, mostly in the southeast region near Somalia.

The Mines Ministry says the Calub and Hilala fields in the southeast Ogaden Basin have deposits of 4.7 trillion cu feet of gas and 13.6 million barrels of associated liquids. The deposits were discovered in the 1970s but have not yet been exploited.

Mines Minister Tolesa Shagi told Reuters that POLY-GCL Petroleum was carrying out seismic tests in both sites, where it has laid some infrastructure such as a 35-km (20-mile) road.

"They will enter the digging phase around June and July (this year)," he told Reuters. "2016 will be a year when major works such the designing and laying of pipelines that will connect with an LNG (liquefied natural gas) plant in Djibouti for export will also be completed."

POLY-GCL Petroleum was set up to develop oil and gas in Ethiopia but aims to expand to other countries. It signed a deal with the Mines Ministry in late 2013 to develop both fields. It also has eight exploration blocks.

POLY-GCL Petroleum said on its website that in 2015 it planned to drill five wells - two appraisal wells to establish the extent of reservoirs and three wildcat wells to look for more hydrocarbons. It also said it planned seismic work.

It did not give further details on timing. Company officials could not immediately be reached to comment.

The project involves developing the fields, building a pipeline from landlocked Ethiopia to the coast of neighbour Djibouti, where it will build an LNG plant and export terminal, the company website said.

POLY-GCL Petroleum said the cost was estimated at $4 billion with first LNG production expected by mid-to-late 2018. Phase one aims to produce 3 million tonnes a LNG a year, eventually rising to 10 million tonnes.

POLY-GCL Petroleum is a joint venture of state-owned China POLY Group Corporation and Hong Kong-based Golden Concord Group.

African's eastern seaboard could soon become a major global LNG producer, with other projects planned based on big gas finds made in Tanzania and Mozambique.

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