Somaliland, Ethiopia and China to Sign Trilateral Deals

August 14, 2011

It added Somaliland, Ethiopia and China are expected to sign trilateral agreements on gas, oil and logistic deals in the days ahead.

Just last month, Hong Kong-based PetroTrans Company Ltd signed a deal with the Ethiopian Government to purchase gas and oil over a 25 year period. The Chinese company will invest close to $4 billion in developing oil and gas reserves in blocks 3 and 4, 11 and 15, 12 and 16, and 17 and 20 in the Ogaden region.

John Chine, chairman and president of PetroTrans, told reporters in Addis Ababa that his company plans to build oil and gas pipelines from the Ogaden basin to the Somaliland sea port of Berbera. He revealed they will also build processing facilities in the town over the next three years.

Today, the Somaliland government re-echoed Mr Chine’s words– finally revealing that China will export oil and gas finds from Berbera. They added as well as building these key infrastructure for gas and oil, the Chinese government has given the green lights to expand the port. They said once completed the port will be able to serve the entire East African region.

Berbera port sits on a strategic location at the mouth of the Red Sea and at the center of Asia, Africa and the Middle East. The Government in Hargeisa might lease it to Hong Kong-based Hutchison Port Holdings (HPH). The Ethiopian Shipping Lines (ESL) might also become one of the main shareholders. ESL announced this week that it has placed an order for nine additional vessels from China at a cost of $293 million. The vessels might be used in Berbera.

The port is expected to become the main port of Somaliland and Ethiopia, a landlocked nation ever since its former territory of Eritrea declared independence. Somaliland believes if Berbera is managed by China, it will exceed its rival neighbor Djibouti once given a full face-lift since 90 percent of goods in Africa are from China.

Road and rail networks that will connect Berbera to Ethiopia and other key infrastructures and networks in the region will be part of the project.

The statement finally said Somaliland, Ethiopia and China will sign the agreements in well organized reception in the Chinese capital. It is not clear if the Ethiopian Prime Minister Meles will sign on the Ethiopian side. He is currently in China as well to attend the opening ceremony of the 26th Summer Universiade in Shenzhen.

“The project, the biggest investment in the country yet, is anticipated to contribute significantly to the country’s social and economic progress,” the statement said.

Experts believe Berbera port will become an important trading hub for Chinese traders in the region. It could provide services as both a transit port for the region and an international transshipment and refueling center.