Ethiopia has officially shelved its long-anticipated natural gas pipeline project linking the Somali Regional State of Ethiopia to Djibouti, citing financial hurdles and shifting development priorities. Initially envisioned in 2028 as a 767-kilometer corridor for transporting natural gas to an LNG terminal for export, the project has now been discontinued, according to the recently released Ethiopia Energy Outlook 2025.
The pipeline, which had attracted early-stage discussions involving Black Rhino—a former Blackstone portfolio firm—was seen as a game-changing infrastructure for East Africa. The company had conducted a preliminary feasibility study and showed interest in establishing a refined petroleum products pipeline as well. However, economic viability and alignment with national strategies remained major stumbling blocks.
The gas reserves in Ethiopia’s Somali Regional State, also known as Ogadenia, were discovered decades ago, but progress on extraction and export was long stalled due to armed resistance. The Ogaden National Liberation Front (ONLF), a Somali rebel group advocating for the region’s autonomy, had opposed energy exploitation without local consent. Tensions escalated in 2007 when Chinese engineers working on the gas fields were abducted, drawing global attention to the region’s instability.
Since the landmark peace deal between the Ethiopian government and the ONLF in 2018, the Somali region has experienced a remarkable transformation into one of the most peaceful areas in the country. Despite the newfound stability, the ambitious pipeline project was ultimately abandoned in 2022 due to mounting financial constraints, significantly dashing hopes of gas export revenue.
New Focus: Fertilizer for Food Security
Speaking today, Prime Minister Abiy Ahmed announced that a new fertilizer factory—under construction for the past 40 months—is nearing inauguration. “Agricultural productivity cannot be complete without domestic fertilizer production,” he emphasized, underlining the strategic link between food security and local industrialization.
Last week, Ethiopia reached a high-level agreement with Nigeria’s Dangote Industries to establish a $3 billion fertilizer plant in the Somali Regional State. The project, one of the largest of its kind in East Africa, is expected to stabilize fertilizer supply chains, reduce import dependency, and boost yields for millions of farmers.
PM Abiy confirmed that discussions with Nigerian billionaire Aliko Dangote are in advanced stages, with both parties committed to fast-tracking the investment. The shift in focus from gas to fertilizers signals Ethiopia’s intent to prioritize domestic development and agricultural transformation over uncertain energy exports.
As the Somali region embraces a new era of peace and productivity, many see the Dangote-led fertilizer project as a turning point—not just for Ethiopia’s agriculture, but for the economic revival of a region long defined by conflict and underinvestment.