Djibouti, Ethiopia greenlight $1.55bn Africa pipeline

BRM, a joint venture formed by Black Rhino, a Blackstone portfolio company, and MOGS Oil and Gas Services, a South Africa-based company providing services to the mining, oil and gas industries, has signed a framework agreement with the governments of Djibouti and Ethiopia for the construction of a 550 kilometre (km) pipeline, Blackstone said in a statement.

The agreement effectively allows BRM to proceed with the construction of the Horn of Africa pipeline that will transport diesel, gasoline and jet fuel from Damerjog, Djibouti to Awash in central Ethiopia.

According to the statement, the $1.55 billion project will increase the efficiency and safety of Ethiopia’s fuel import supply chain by reducing fuel transportation costs, increasing scalability of fuel imports and significantly reducing carbon output by eliminating the need for fuel imports.

“The project will also reinforce Djibouti as a regional shipping hub by expanding the port’s capacity,” Blackstone said.

The pipeline is expected to be completed in 2018.

An infrastructure development company, Black Rhino was founded in January 2012 by Brian Herlihy. Blackstone invested in the company in July 2014 with a view to jointly developing large-scale infrastructure projects across sub-Saharan Africa with a focus on the energy sector. In addition to investing in the company, Blackstone is also helping build the Black Rhino team.

BRM is the second partnership Black Rhino has formed since Blackstone invested in the company. In August 2014, Black Rhino teamed up with West African conglomerate Dangote Industries with plans to jointly invest $5 billion in energy infrastructure projects in sub-Saharan Africa over a five-year period.

Blackstone’s presence in Africa also includes its portfolio company Sithe Global, through which it is a lead investor, alongside the Aga Khan Fund for Economic Development, in the 250-megawatt Bujagali hydropower plant in Uganda. The asset manager is also a founding investor in Kosmos, an oil and gas exploration company that has worked with the government of Ghana and Ghana National Petroleum Company to develop the deep-water Jubilee oil field.

The New York-listed investment firm’s asset management businesses, with over $330 billion in assets under management, include investment vehicles focused on private equity, real estate, public debt and equity, non-investment grade credit, real assets and secondary funds.

As for the energy sector specifically, Blackstone has since inception invested approximately $7 billion of equity globally.