Ethiopia opens first phase of Ogaden LNG project, pivoting from exports to power its own growth
CALUB, Somali Region — Under a rinsed-blue sky and a brisk Ogaden wind, Ethiopia on Thursday inaugurated the first phase of its long-delayed liquefied natural gas project, a move that signals a decisive turn inward: from chasing export windfalls to fueling its own power grid, factories, and farms.
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Prime Minister Abiy Ahmed stood before an array of valves and silvered pipes at the Calub gas field and called the Ogaden LNG project “a cornerstone of our economic independence — supporting agriculture, energy security, and technological advancement.” The facility will initially produce 111 million liters of LNG annually, government officials said, with a second phase under construction that, if realized, would expand output to about 1.3 billion liters a year.
The launch caps years of fits and starts in a region that has long been rich in hydrocarbons but starved of investment. Discovered in the 1970s, the Calub and nearby Hilala fields sat idle through decades of insecurity, contested governance, and infrastructure gaps. In 2013, the Chinese firm Poly-GCL Petroleum Group won development rights in a production-sharing deal. A grand plan followed: a 767-kilometer pipeline to Djibouti and a Red Sea export terminal, which briefly promised to make landlocked Ethiopia an unlikely LNG player.
A pivot away from exports
That export model is now formally shelved. Addis Ababa canceled the pipeline plan this year, citing financing shortfalls and a strategic shift toward domestic use. In doing so, Ethiopia joins a growing roster of resource-rich countries rethinking their energy equations in the face of volatile global prices, higher borrowing costs, and a renewed emphasis on self-reliance.
Officials say the Calub complex will eventually supply up to 1,000 megawatts of power to the national grid—no small claim for a country where hydropower has long been the backbone and vulnerability of the system. Drought has dimmed turbines before; the promise of gas, if delivered, is a steadier baseload for factories and cities. The government also pitches the project as feedstock for fertilizer and petrochemical plants, bound up with Abiy’s drive for food security and import substitution under the “Homegrown Economic Reform” blueprint.
In a sign of how quickly Ethiopia’s industrial ambitions are evolving, officials say the gas will help power energy-hungry data centers and even cryptocurrency mining. That last part may raise eyebrows. In a nation where households still face blackouts and millions of people cook with biomass, will electrons be rationed toward new digital industries? The government’s answer is that a bigger energy pie can feed both development and innovation—if the project scales up as planned.
What the first phase promises
Beyond the gleaming modules in Calub, the LNG project anchors a broader $10 billion investment plan across the Somali Region, one of Ethiopia’s least-developed corners. The spending covers power transmission lines, roads, and industrial zones—an attempt to stitch the region’s economy closer to the rest of the country. Local elders and business leaders who traveled to the site framed the moment as overdue recognition of a region whose name is often misread abroad as shorthand for drought and conflict, rather than as a frontier of Ethiopia’s resource potential.
“Our youth need jobs here, not far away,” a community organizer told me on the sidelines, watching a convoy of trucks rumble past newly painted fences. “If the gas means factories, training, and electricity that stays on, it will change lives.”
For Addis Ababa, the calculus is also political. Building a durable industrial base requires dependable power, and Ethiopia’s growth narrative has frayed in recent years amid inflation, unrest, and the aftershocks of conflict. LNG produced in Ogaden will not replace the vast hydropower megaprojects—such as the Grand Ethiopian Renaissance Dam on the Blue Nile—but it can complement them, especially during dry spells.
Risks and unknowns
Even on an optimistic day, the fine print matters. The government has not disclosed final financing arrangements for the expanded phases, nor provided detailed environmental safeguards. Methane—the main component of natural gas—is a potent greenhouse gas when leaked. How Ethiopia monitors fugitive emissions, manages water use in an arid landscape, and handles community consultations will be closely watched by environmental groups and investors alike.
The country’s relationship with Poly-GCL and any other future partners is another open question. A 2019 framework for a Djibouti export terminal and pipeline lagged for years before being scrapped. This time, officials insist, the domestic route is simpler, cheaper, and more aligned with national priorities. Engineers on-site said the modular approach taken at Calub is meant to avoid the “all or nothing” traps that have stalled megaprojects elsewhere on the continent.
Security remains a variable. The Somali Region has stabilized compared with past decades, but it shares porous borders and faces the same pressures—climate, pastoralist mobility, economic grievances—that roil much of the Horn of Africa. Maintaining community trust around a high-value asset will test local governance as much as engineering.
Why it matters beyond Ethiopia
Globally, the Ogaden pivot echoes a broader trend: governments rebalancing away from exporting raw commodities and toward capturing more value at home. From Indonesia’s nickel policies to Nigeria’s push for domestic gas-to-power, the calculus is the same—more jobs, more resilience, less exposure to international whiplash.
There’s also a timing element. Global LNG markets have seen boom-bust cycles; the supply wave from the United States and Qatar is reshaping pricing and timelines for newcomers. Ethiopia, landlocked and capital-constrained, was never going to outbuild the giants on the Red Sea. But by focusing on domestic demand—keeping the gas close, turning it into electrons, fertilizer, and plastics—it can sidestep the most punishing parts of the export game.
Still, energy choices are climate choices. Ethiopia is among Africa’s leaders in renewable potential. Every dollar spent on gas infrastructure is a dollar not spent elsewhere. The government’s counterargument is pragmatic: a diversified energy mix can underwrite a faster transition, not delay it. Whether that proves true will depend on careful design, transparency, and the discipline to avoid locking in yesterday’s technologies.
What to watch next
- Ramp-up timetable: How quickly can annual output rise from 111 million liters to the planned 1.3 billion? Slippage is common; clarity will build confidence.
- Grid integration: Will the promised 1,000 megawatts materialize, and how will the power be prioritized between households, industry, and new digital players?
- Financing and partners: Who is backing the next phases, and on what terms? Without transparency, risks are hard to price.
- Environmental safeguards: Robust methane monitoring, water management, and community consultation will be essential in an arid, pastoralist region.
- Downstream industries: Timelines for fertilizer and petrochemical plants will show whether Ethiopia can translate gas into jobs and value-added exports.
On inauguration day, the pageantry at Calub was purposefully modest—no grand arches, just a few tents, hard hats, and flags snapping in the desert air. Perhaps that was the point. Ethiopia has opted, at least for now, for a homegrown energy path that prizes reliability over spectacle. In a country where much depends on keeping the lights on, the measure of success will come not from offshore terminals but from the hum of factory floors in Dire Dawa, the glow of clinics in Jijiga, and the steady current that lets students in Degehabur study after dark. If the gas under the Ogaden can do that, this pivot will have been worth the wait.
By Ali Musa
Axadle Times international–Monitoring.
