Chinese Private Firm Secures $4.2 Billion Landmark Natural Gas Deal

Deep News03-19 20:06

A major Chinese solar energy company has signed a substantial $4.2 billion natural gas agreement. The deal, spanning 25 years, was inked between GCL Group and the African industrial conglomerate Dangote Group.

The agreement involves GCL supplying natural gas from the Calub gas field, located in Ethiopia's Ogaden Basin, to a fertilizer plant owned by Dangote via a dedicated 108-kilometer pipeline. The $2.5 billion plant, a joint venture with Ethiopia's Investment Holdings (EIH), is designed to produce 3 million tons of urea annually and is scheduled to commence operations in 2029. This project establishes a complete industrial chain from gas to fertilizer to agriculture in the region.

This contract represents a significant strategic shift for GCL. The company originally acquired development rights in the Ogaden Basin in 2013 with plans to export liquefied natural gas to Asian markets. However, challenges including complex cross-border pipeline logistics, unfavorable international gas prices, and a subsequent change in Ethiopian government policy prioritizing domestic gas utilization hindered the export plan. The recent completion of a small-scale LNG facility in 2025 provided a new pathway, allowing GCL to pivot towards supplying local industry.

The move into natural gas is also seen as a strategic diversification for GCL amid a difficult period for its core polysilicon business. The solar industry has faced severe price competition, leading to reported losses for major players, including GCL, in the first half of 2025. The company's natural gas assets are now considered a core part of its portfolio.

GCL's strategy in Ethiopia extends beyond the fertilizer plant. The company has also signed a memorandum of understanding with the Ethiopian Electric Power company to potentially supply power to data centers and explore electric vehicle charging infrastructure. This indicates an ambition to evolve from an energy supplier into a comprehensive infrastructure operator, integrating gas, power, and digital economy applications.

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