Ethiopia has commenced the construction of a new oil refinery in Gode, Somali Regional State, marking a major step toward reducing the country’s dependence on imported petroleum products.

The refinery, being developed by China’s Golden Concord Group Limited (GCL) in partnership with Ethiopia Investment Holdings, is expected to produce about 3.5 million tonnes of refined fuel annually. It will process crude oil and condensate from the Hilala oil field in the Ogaden Basin.

Prime Minister Abiy Ahmed, who presided over the foundation-laying ceremony, described the project as a milestone for the nation’s industrial and economic ambitions. He noted that the refinery and a newly launched urea fertilizer plant reflect Ethiopia’s commitment to self-reliance and sustainable growth.

The Ogaden Basin has long been known for its oil and gas potential, with exploration activities dating back more than a century. Despite discoveries of substantial natural gas reserves in the 1970s, the absence of infrastructure and persistent security challenges delayed development.

GCL, which entered Ethiopia in 2013, took over the Calub and Hilala concessions and began limited crude production in 2018. The new Gode refinery represents the first major downstream facility to break ground in the region.

Officials say the project aligns with Ethiopia’s 10-year development plan, which prioritizes industrial expansion and energy security. The refinery is expected to significantly reduce the nation’s annual fuel import bill—currently estimated at around $5 billion—and ease pressure on foreign exchange reserves.

In addition to the refinery, Prime Minister Abiy also launched the construction of a urea fertilizer plant in partnership with Nigeria’s Dangote Group. The plant will utilize natural gas from the Calub field to produce three million tonnes of fertilizer annually.

Both initiatives are seen as central to Ethiopia’s drive to industrialize its economy and build a foundation for long-term energy independence.