Ethiopia and Djibouti signed Memorandum of Understanding (MoU) to explore joint opportunities for the development of oil storage facility in Djibouti’s Damerjog Industrial Park.
Chief Executive Officer of Ethiopian Investment Holdings, Mamo Merhertu and Chairman of Djibouti Ports and Free zones Authority and Great Horn Investment Holding, Aboubaker Omar Hadi signed the MoU.
According to Ministry of Foreign Affairs, the MoU intends to create conducive environment for future joint development of oil storage terminal in Djibouti which will ultimately take the existing well-founded strong economic ties between the two sisterly countries to a higher level.
To this end, it envisages several collaborative mechanisms to set up an oil storage facility in Damerjog to provide storage services to petroleum products destined for the gateway demand of both Djibouti’s and Ethiopia’s markets as well as Transshipment.
The signature of the MOU was attended by State Minister for Foreign Affairs of Ethiopia Ambassador Birtukan Ayano and Ethiopian Ambassador to Djibouti Berhanu Tsegaye.
During the signing ceremony of the document, the high-level officials of both countries underscored that the new initiative is critically important to ensure a sustainable oil supply to Ethiopia’s oil demand which roughly increases by 10 percent every year.
Due to the suspension of Djibouti’s operating oil port, Ethiopia is requesting that the Djibouti administration promptly provide alternate tankers for the incoming petroleum cargo.
The Ethiopian Petroleum Supply Enterprise (EPSE) delegation asked Djibouti authorities to provide alternative discharge ships for oil imports during its visit earlier this week.
On Monday, July 29, the Enterprise delegation, headed by newly appointed EPSE CEO Esmlealem Mihiretu, met with Aboubaker Omar Hadi, Chairman of the Djibouti Ports and Free Zones Authority (DPFZA).
During the meeting, representatives from EPSE asserted that the delay in gasoline supply for trucks departing Horizon and the current unavailability of two storage tanks at Horizon Terminal, which is closed for a year for repairs, are to blame.
The company, which is Ethiopia’s only importer and has a strategic store of petroleum products, is reportedly searching for alternatives, according to information obtained from DPFZA.
DPFZA said, “Several solutions and areas of collaboration were discussed during the meeting.”
During the discussion, the use of the floating vessel M/T Red Sea II, which can store 73,000 cubic meters (CBM), was suggested as a quick fix.
Another option has been to use the oil storage facilities at Djibouti Damerjog Industrial Park (DDIP), a major multi-port complex being built on the border with Somaliland, southeast of the capital Djibouti.
Damerjog Liquid Bulk Port (DLBP) is accommodated by DDIP as part of the enormous project.
The government of Dubai owns all of the shares in the Horizon Djibouti Terminal, which is situated near Doraleh. It was formed in 2003 and started operations in 2005. The 4.5 million tons of annual capacity of the facility is said to be insufficient to meet Ethiopia’s increasing demand.
Ethiopian Investment Holdings (EIH), a sovereign wealth fund (SWF), was negotiating with Djibouti authorities to acquire a thirty percent ownership in an ultra-modern oil port infrastructure that can easily handle boats of the newest generation.
It was reported in late 2022 that the investment holding will acquire the stake through EPSE, one of the 27 enormous public companies under SWF ownership.
The previous CEO of EIH, Mamo Esmlealem Mihretu, and the Chairman of DPFZA, which controls Great Horn Investment Holding, signed a memorandum of understanding (MoU) in May of the same year to investigate potential in the field of oil storage facilities.
The signing of the Memorandum of Understanding (MoU) follows years of intensive talks focused on the cooperative creation of an oil terminal, since the existing facility, Horizon Djibouti Terminal (HDT), is becoming less capable of meeting Ethiopia’s increasing demands for petroleum products.
For example, in late 2017, the transport ministers of the two nations had extensive talks on building a new oil terminal to accommodate Ethiopia’s increasing needs.
As part of the USD 4 billion DDIP, DLBP will have a 13 million tons handling capacity.
During the meeting earlier this week, the EPSE officials also asked the Chairman to install the Djibouti Port Community System (DPCS) platform at the company’s headquarters in Addis Ababa. This will enable the tracking of trucks to be done accurately and on time, as the transactions from Horizon Terminal to Ethiopia will be followed.
