Djibouti - Geothermal Exploration Project

Documet of The World bank FOR OFFICIAL USE ONLY Report No. 9496 PROJECT COMPLETION REPORT REPUBLIC OF DJIBOUTI GEOTHERMAL EXPLOIRATICN PROJECT (CREDIT 1488-DJI) APRIL 12, 1991 Industry and Energy Division Technical Department Africa Regional Office -'his document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  WEIGHTS AND MEASURES 1 cm - centimeter = 0.39 inches 1 m - meter = 3.28 feet 1 m3 - cubic meter = 264 US gallons 1 1 - liter = 0.26 gallons 1 bbl - barrel - 42 US gallons 1 kg - kilogram 2.2 pounds 1 km - kilometer = 0.62 miles 1 km2 - square kilometer = 0.39 square miles 1 t - ton = 2,205 pounds 1 kW - kilowatt - 1,000 watts 1 MW - megawatt = 1,000 kilowatts 1 kWh - kilowatthour = 1,000 watthours 1 GWh - gigawatthour = 1 million kWh ABBREVIATIONS AfDB African Development Bank BRGM Bureau de Recherches Geologiques et Minieres EdD Electricite de Djibouti ENEL Ente Nazionale per L'Energia Elettrica ENI Ente Nazionale Idrocarburi EPH Etablissement Public des Hydrocarbures ISERST Institut Superieur D'Etudes et de Recherches Scientifiques et Techniques OPEC Organization of Petroleum Exporting Countries ppm Parts per million toe Tons of Oil Equivalent in Heating Value UNDP United Nations Development Program USAID United States Agency for International Development  THE WORLD $sAK. FOR OFFICIAL USE ONL. WWwngIon. O.C. 2043 U.S A ogue.* of DT"%". G"4ea April 22. 1991 MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECT: Project Completion Report on Republic of Djibouti. Geothermal Exploratlon Project (Credit 1488-DJI) Attached, for information, is a copy of a report entitled 'Project Completion Report on Republic of Djibouti - Geothermal Exploration Project (Credit 1488-DJI)" prepared by the Africa Regional Office with Part II of the report contributed by the Borrower. No audit of this project has been made by the Operations Evaluation Department at this time. Attachment Thb doGumeI busa guns1g daushuuon and may be umd by n'sOPn only in SM PWtunacae of sho d@lW duufe Is 11ase se&s -not ostwme be d _oe w'tbout Weu X *n_g augmon.  FOR OFmFCIAL USE ONLIk PROJECT COMPLETION REPORT REPUBLIC OF DJIBOUTI GEOTHERMAL EXPLORATION PROJECT CREDIT 1488 DJI TABLE OF CONTENTS Page No. PREFACE .. ....................... .i EVALUATION SUMMARY .ii PART I: PROJECT REVIEW FROM BANK'S PERSPECTIVE . . . . . . . 1 1. Project Identity . . . . . . . . . . . . . . . . . . 1 2. Background.. .. 1 3. Project Objectives and Description . . . . . . . . . 2 Project Objectives... 2 Project Description.... 2 4. Project Design and Organization . . . . . . . . . . . 3 5. Implementation of the Project . . . . . . . . . . . . 4 Project Manager... 4 Geothermal Gradient Drilling . . . . . . . . . . . 4 Deep Drilling Program - Hanle Area . . . . . . . . 4 Hanle 1 . . . . . . . . . . . . . . . . . . . 4 Hanle 2 . . . . . . . . . . . . . . . . . . . 5 Results... 5 Deep Drilling Program - Assal Area . . . . . . . . 5 Assal3... 5 Assal 4 . . . . . . . . . . . . . . . . . . . 5 Assal5 .5... . . . . . . . ....6.... . C Assal 6... 6 Results... 6 Training and Equipment . . . . . . . . . . . . 7 Power Studies . . . . . . . . . . . . . . . . 7 Procurement... 7 6. Performance of the Bank . . . . . . . . . . . . . . . 8 Performance During Preparation . . . . . . . . . . 8 Performance During Implementation . . . . . . . . . 8 7. Performance of the Borrower . . . 8 8. Performance of Consultants and Contractors. 9 9. Lessons Learned . . ... . . . . . . . . . . 9 PART II: PROJECT REVIEW ?ROM BORROWER'S PERSPECTIVE . . . . . 10 10. Comments on Part I ......... ... .. .. . 10 |This document has a restricted distribution and may be used by recipients only in the performance| |of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.|  TABLE OF CO9TMEN (Cont.) Page No. PART III: PROJECT DATA . . . . . . . . . . . . . . . . . . . 13 Table 1: Related Bank Credits . . . . . . . . . . . . 14 Table 2: Project Timetable . . . . . . . . . . . . 14 Table 3: Cumulative Estimated and Actual Credit Disbursements . . . . . . . . . . . . 15 Table 4: Project Implementation . . . . . . . . . . . . 15 Table 5s Project Costs . . . . . . . . . . . . . . . . 16 Table 6: Project Financing . . . . . . . . . . . . . . 16 Table 7: Prnject Results . . . . . . . . . . . . . . . 17 Table 8: Status of Covenants . . . . . . . . . . . . . 18 Table 9: Staff Inputs . . . . . . . . . . . . . . . . 18 Table 10: Major Project MJssions . . . . . . . . . . . 19 MAP: IBRD 21837R  REPUBLIC OF DJIBOUTI GEOTHERMAL EXPLORAION PROJECT CREDIT-1488-DJI PROJECT COMPLETION REPORT PREFACE This is the Project Completion Report (PCR) for the Geothermal Exploration Project in Djibouti, for which Credit 1488-DJI in the amount of SDR 5.7 million was approved on May 31, 1984. The Credit was closed on June 30, 1988, eighteen months behind schedule. It was 95% disbursed, with the last disbursement made on January 11, 1989. The PCR was jointly prepared by the Industry and Energy Division of the Africa Region's Technical Department (Preface. Evaluation Summary, Parts , and III) and the Borrower (Part II). Cofinanciers provided no comments on the PCR. Preparation of this PCR was started during tne Bank's early missions for the follow-up 2eothermal Development Project, and is based, inter alia, on the President's Report, the Credit and Project Agreements, supervision reports. correspondenco between the Bank and the Borrower, a preliminary final report prepared by the Borrower, and internal Bank memoranda.  - 1i - REPUBLIC OF DJIBOUTI GEOTHERMAL EXPLORATION PROJECT CREDIT 1488-DJI PROJECT COMPLETION REPORT EVALUATION SUMMARY i. The presence of a geothermal resource in Djibouti has been known for many years and various efforts have been made towards exploration and possible development of the resource. These efforts were mainly financed by the UNDP and also on a bilateral basis principally by the Italian and the French governments. Because of the high cost of imported fuel used to produce electric power and the resulting high cost of power to the consumer, the Government has attached a high priority to the exploration and development of the only indigenous source of power it has, geothermal resources. In 1982, therefore, the International Development Association was requested by the Government of Djibouti to make available a credit which, along with other sources of funding, could be used for the exploration for a viable geothermal resource. ii. In November 1984, a Development Credit Agreement was signed for a project whose main objective was to explore the country's only known source of mineral energy in an effort to prove commercially exploitable geothermal reserves. Additional financing was provided by the Government of Italy, UNDP, the OPEC Fund, African Development Bank and the Government of Djibouti. The Government of France made available to the Project the services of BRGM, its office of geological and mining research. iii. A major delay in the startup of the project was experienced due to late signature of an agreement between the Italian Ministry of Foreign Affairs and Aquater, the firm responsible for Project supervision. Because of this delay, the implementation of the project was prolonged by about eighteen months, necessitating two extensions to the closing date. iv. Early in the Project, it was agreed that the initial thrust of the exploration should be in the Hanle/Gaggade area in the western portion of the Republic. After some preliminary field work and geothermal gradient drilling, two deep holes were drilled, Hanle 1 and 2. These holes were very disappointing from a geothermal resource point of view as temperatures were found to be quite low. As a result, the exploration effort in the Hanle area was abandoned. However, the Hanle 1 well, was determined to be capable of producing 100 cubic meters cf fresh water per hour at a temperature of 480C which could be used for irrigation purposes. v. After the disappointing results in tk- Hanle area, it was agreed that the exploration efforts, including the drilling, would be concentrated in the Assal area where, in the 1970's, the French had encountered a geothermal resource in a well designated Assal 1. This well produced a brine which was supersaturated with dissolved solids such as sulfides, silica and carbonates, known to cause scaling problems bV.h within wells and on  - iii - steam processing equipment. Nevertheless, as a result of experience gleaned in the Salton Sea of California, it was thought that this type of brine could be effectively exploited in the Assal area. vi. It was agreed by Project participants that the first well, Assal 3, would be located only a few meters away from Assal 1 to reduce the possibility of missing the reservoir encountered in Assal 1. The results of Assal 3 were very encouraging in that over 200 tons per hour of water and steam at a formation temperature of 260