The pipeline comes as the two countries adjust into an economic growth driven partnership after recently ending two decades of military standoff.
The United Arab Emirates has become the latest Gulf country to show interest in oil reserves in the Horn of Africa as it seeks to invest in the commodity’s evacuation.
The UAE plans to build an oil pipeline between Ethiopia and Eritrea connecting Addis Ababa to the port city of Assab.
This comes as Ethiopia continues to mull over investments in the oil sector, having commenced crude oil extraction on a test basis in June.
The country which has recently signaled it’s willingness to open up it’s economy to foreign investors, under the leadership of Prime Minister Abiy Ahmed, has oil reserves in the country’s southeast region.
Prime Minister Ahmed is said to have already held a meeting with the UAE Minister of State for International Cooperation Reem Al Hashimy on the planned pipeline project, which will be instrumental in the evacuation of the country’s oil, with Eritrea’s port being the exit point for its exports.
The move is the latest in the recent of planned investments in the country with a 100 million population.
Ethiopia is viewed as the regions giant and its awakening is likely to have a huge impact in the region’s economic growth.
The UAE move to invest in the pipeline is seen as a rush to beat its rivals including neighbours Qatar, among other net oil investor countries in the world.
The pipeline comes as the two countries adjust into an economic growth driven partnership after recently ending two decades of military standoff over a border war which lefts hundreds dead.
Eritrean Airlines has begun regular flights to Ethiopia opening up the two economies. The two countries have also re-opened embassies in each other’s capital.
Under Prime Minister Abiy Ahmed, the country which has for decades remained adamant on opening its economy to foreign investments has indicated it was open for business.
The move has seen companies from the Region, with the likes of Kenya’s giant telecommunication company-Safaricom and lender KCB Group showing interest in crossing the border into Ethiopia.
The latest infrastructure development is however likely to have an impact on the implementation of the $23 billion Lamu Port-Southern Sudan-Ethiopia Transport Corridor (LAPSSET) with Ethiopia seen to likely focus on investments towards the North rather than South.