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Sonangol Confirms Suspension of Refinery Construction

Angolan state hydrocarbon company Sonangol, has declared, as suspended, construction work on its 200,000Barrels Per Day Refinery in Lobito, in the country’s southwest.

The company also suspended the Oil Storage Terminal undergoing construction at Barra do Danda, near Luanda.

The announcement on Sonangol’s  website, confirms what Africa Oil+Gas Report published in its Refining Gap issue, ( Volume 17, No 5), released in late July 2016.

It looks like, for some time at least, Africa’s largest crude oil exporter will continue to import most of the refined products  it consumes.

The Angolans have been quit taciturn about releasing information about the status of the refinery construction.  Until this announcement, the best you could get from  the latest Angolan update of the United States’ Energy Information Administration. (EIA), wasthe official line: “Construction on a new Sonaref refinery in Lobito started in December 2012”.

And everywhere else in the public domain, “the refinery will have an initial processing capacity of 120,000BOPD and is scheduled to come online latest 2018.”

What should interest you is thesub sentence, “although the start date has been pushed back before”.

Africa Oil+Gas Report  had noted in the cited edition  that “no construction is going on at the plant, located in Lobito in  Benguela Province, on the Atlantic Coast north of Catumbela Estuary close to the country’s southwest.The promise by project promoters, that construction of the refinery would begin in earnest in 2015, after the initial groundbreaking in 2012, never came to pass.Sonangol did hire Standard Chartered Bank UK In December 2013, provide financial consulting , but the required funding did not come.

The Sonaref refinery first came to global attention at the World Petroleum Congress in Johannesburg, South Africa in September 2005, when Songol announced it had a list of willing partners queueing up to finance the project. In March 2006, the president of Sonangol and the vice president of Sinopec signed a partnership agreement to develop the refinery of which Sonangol would hold 70% of the stakes and Sinopec 30%. The (then) $3.5Billion project was planned to have the capacity to process 200,000 BPSD. Sinopec, the sole funder of the project, expected the refinery to start operations in 2010.

The Chinese pulled out early in the transaction, almost before the ink was dry on their agreement with Sonangol. In 2007, Sinopec withdrew from the project, citing concerns about the inclement climate for refined products. Coincidentally,Sinopec withdrew from its stakes in Angolan offshore oil blocks 15, 17 and 18, almost immediately after the end to negotiations on Sonaref.

The refinery is expected to run on Angola’s crude oil, with refined products sold to domestic and international markets. EIA explains that preliminary estimates show that Angola consumed roughly 130,000 BOPD of petroleum products in 2015, more than double the volume consumed ten years earlier. In September 2014, the government raised retail fuel prices by 25% for gasoline and diesel, by 21.6% for liquefied petroleum gas, by 34.6% for kerosene, by 100% for heavy fuels, and by 18.8% for asphalt.


Dangote Refinery: Low Double Digit Return in Seven Years

Devakumar Edwin, Group Executive Director of Dangote Industries Limited, says he expects a “low double digit return” from investment in its 650,000BPSD crude oil refinery seven years after commissioning.

The company has spent over $500Million so far paying for land, earthworks and land reclamation, jetty construction, buying capital and earthmoving equipment and other logistics.

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Dangote Refinery Will Be Subsidy Neutral

The 650,000BOPD Dangote Crude Oil Refinery, currently under construction, will sell its products to wholesale suppliers, not retailers, according to officials of the Dangote Industries. If the price of its gasoline is higher than the subsidized price, the buyers pay Dangote Refinery in full and then get the subsidy from government.

“We will be subsidy neutral”, officials explained on a recent tour of the 2,135 Hectare refinery grounds by Africa Oil+Gas Report.

Nigeria moved towards full deregulation of the downstream of its oil and gas industry in the week of May 9, 2016, with the government announcing the removal of subsidy on gasoline, but the country’s influential trade union, the Nigerian Labour Congress (NLC) has opposed the removal, threatening to shut down the economy if the action was not rescinded.

Dangote Industries expects to buy crude at international prices once the plant is commissioned, expectedly, in 2019. Devakumar Edwin, Group Executive Director of Dangote Industries Limited, who is overseeing the construction of the refinery, the 3MMTPA fertiliser plant and the Petrochemicals plant, all co-located in the 2,700Hectare land in the Lekki Free Trade Zone in the east of Lagos, said that the refinery will be able to supply the entire gasoline requirements of the country when it is fully operationalized. He acknowledges that there is no consensus on the volume of gasoline in demand, “but whatever it is  we will be able to supply it”


Dangote Races to Complete Refinery and Fertiliser Plants by 2018/2019

Devakumar Edwin, Group Executive Director of Dangote Industries Limited, says he expects the Mechanical completion of the 650,000 BPSD Dangote Refinery by end of 2018 and commissioning to happen by 2019. He is looking forward to commissioning the Three Million Tonne Per Annum (3MMTPA) Ammonia Fertiliser plant by 2018.

On a trip to the project site last weekend, Edwin showed journalists from two media companies: Africa Oil+Gas Report and CNN the stages of construction on both the 300Hectare fertiliser site, which is quite advanced and the 2,135Hectare refinery grounds, where sand filling and earthworks are going on. “This is the largest single train refining plant in the world”, he gushed about the refinery project.

Three Single Point Mooring (SPM) Bouys on the Atlantic Ocean, will bring in the crude, which will be delivered to the plant through a 20km pipeline. Edwin, a chartered engineer and Indian national vested with the responsibility of overseeing all the plants in the Dangote Group, said that the refinery was designed to utilise all African crudes.  “One option was to reduce ourselves to Nigerian crude”, he said. But the company decided to “build in flexibility to minimise the risks”.

Work on the Dangote Refinery project commenced on February 11, 2014, according to Henri Wijnen Riems, who is director of construction, project scheduling and monitoring.


$10 Oil Soon? How did we get here?

By Olountele Dokun

On Thursday, January 14, 2016, “Oil-Price.Net”, a commodity trader, posted $30.31/barrel for the (North Sea) Brent Crude, against which our Bonny Light is indexed.

On the same day, anchor persons on BBC World Business Today, a daily Television dialogue, quoted Standard Chartered Bank analysts predicting, pessimistically, $10/ barrel for the black gold“someday soon”. The previous day, on January 13, 2016, Ibe Kachikwu, the Nigerian minister of state for Petroleum, in a CNN interview, hoped that production cuts, to boost price, could be achieved with OPEC and non-OPEC countries, Russia inclusive.

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Ghana Does Not Plan To Privatise its Only Refinery

John Ankromah in Accra

Ghana’s minister of energy says the country has not put its 45,000Barrels of Oil Per Day (BOPD) refinery on the auction block.
The Tema Oil Refinery (TOR) is currently under rehabilitation.

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GE Delivers Mobile Gas Turbines for Port Harcourt Refinery

American Contractor General Electric (GE) has completed the supply and installation of three 25-megawatt (MW), trailer-mounted, TM2500+ aeroderivative gas turbines to generate uninterrupted power at the 210,000 barrels per day capacity Port Harcourt refinery in Nigeria’s Rivers State. The supply was made through Genesis Electricity Limited, an independent power producer.

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Ogbele Produced 45 Million Litres of Diesel in Three Years

By McJohn Adjoto

Mini refinery earned close to $13Million in 2014

The Mini refinery located on the Ogbele marginal oil and gas field in eastern Nigeria has produced over 45 Million litres of diesel since it was commissioned in December 2011.

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Sonaref Construction to Begin, Finally

Angola now has a clear sight of the money with which it will build its much anticipated mid-sized refinery. Construction will begin on the site in 2015, according to Sonangol, the state hydrocarbon company and owner of the planned 200,000BOPD facility

The money will come from the Chinese, who decided to opt out of the partnership with Sonangol, the state hydrocarbon company, in the first place.

China Development Bank (CDB) has extended a $2 billion line of credit to Sonangol in a financing deal signed on December 12, 2014.

Seven years earlier, (in 2007) Sinopec, one of China’s top oil firms, walked out on the project over disagreement with Sonangol on equity to which it was going to be entitled to.

The 10-year loan agreement with CDB which opens prospects for other long-term financing, also will fund in part construction of Sonangol’s refinery in Lobito, a coastal city on the edge of the south Atlantic.


Mthombo, Sonaref, Still Far From the Starting Blocks

South African and Angolan led refinery projects have been on the drawing board for 10 years.

By Toyin Akinosho, Publisher

Project Mthombo and the Sonaref Refinery‚ two government-led refinery projects meant to collectively process 500,000Barrels of Crude Oil Per Day in Subsaharan Africa, are stalled. Project Mthombo is the South African PetroSA planned 300 000-barrel-aday refinery at Coega in the country’s eastern cape.  Sonaref is the Angolan Sonangol initiated 200,000BOPD project sited at the historic port town of Lobito, on the Angolan edge of the south Atlantic.

18 months after PetroSA signed a two-year framework deal with Chinese behemoth Sinopec, to advance the project ‚ no decision has been made to start construction.

Both Mthombo and Sonaref have been on the drawing board for close to 10 years now. They were both announced, with flourish, at the World Petroleum Congress in Johannesburg, South Africa, in September 2005. The South Africans told the elite delegates to the global petroleum assembly that, owing to an expected shortage in petroleum products around 2020, they were working on a transformational refinery planned to process about 400,000BOPD of crude.

On their part, the more self- assured Angolans said they had a list of investors who would partner them in funding the refinery that would cure the high import of petroleum products in a country with high crude oil production.

But in 2007, Sonangol’s initial partner, Sinopec, walked out of the project. In 2009, Sonangol went ahead and contracted the Field studies to American engineering firm KBR. Sonangol hired Standard Chartered Bank as financial consultant for the project in December 2013.

Meanwhile, in April 2013‚ the same Sinopec, which had walked out of Angola, signed a framework agreement with PetroSA to advance the business plan. PetroSA said it was developing the Mthombo project with Sinopec as anchor partner and the Industrial Development Corporation as funding partner.

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