If the Joint Study Agreement between Sinopec and PetroSA goes through to commercial phase, the Chinese will have a hefty investment in a 400,000BOPD Crude Oil Refinery in South Africa.
The anticipated cost of constructing this mammoth hydrocarbon processing facility in South Africa’s Eastern Cape has been put at somewhere between $9 and $12 Billion.
This promises to be China’s largest investment in an African Refinery.
Or does it?
A full 24 months before the PetroSA –Sinopec JSA, another Chinese firm had penned a Heads Of Agreement with a Nigerian state company on the construction of three greenfield refineries and a petrochemical plant, estimated to cost $28.5Billion. The parties involved were China State Construction Engineering Corporation (CSCEC) Limited and the Nigerian National Petroleum Corporation (NNPC). The terms called for the joint sourcing of funds for the projects, to be sited in Lekki in Lagos State(west), Brass in Bayelsa State(east) and Lokoja in Kogi State (north). The project was envisaged to add 750,000 barrels per day of extra refining capacity to Nigeria’s current 445,000 barrel per day nameplate capacity.
These two anticipated deals, in the south and west of the continent, certainly push up the scope of China’s refinery construction in Africa. Although little has been heard, in the past year, about the CSEC agreement with the NNPC, a government appointed task force on the state of Nigerian refineries put back the story in the media, saying, in a report released in November 2012: “Of the three joint venture greenfield refinery options under consideration by NNPC, the economics strongly favour Lagos. This option should therefore be explored as a priority. The other options, Bayelsa and Kogi, should be explored subsequently.”
Chinese companies have invested in the construction of four refineries in Africa between 1998 and 2011. Most of them are small.
China started getting involved in African refinery projects when CNPC and Sudan’s Ministry of Energy & Mining of (MEM) signed the General Agreement for the establishment of a Joint Venture Refinery Company in Khartoum on March 1, 1997. On May 16, 2000 the refinery was formally put into operation and now processes 100,000BOPD.
In July 2006, the Algerian state hydrocarbon company Sonatrach brought online, with the China National Petroleum Company(CNPC)the small-13,000 BOPD Adrar refinery, in the centre of the country.
CNPC finished construction of the 20,000BOPD Soraz Refinery in the Republic of Niger in November 2011, five months after it commissioned a refinery of similar capacity in Djarmaya, in the republic of Chad.
Chad and Niger are two large, sparsely populated neighbouring countries bounding Nigeria to the north.
The Soraz refinery will initially draw crude from three wells in the Agadem field, with reserves totalling 480 million barrels. Local consumption of refined products accounts for 7,000 barrels a day with plans to export the rest.
The feedstock for the Djarmaya refinery’s comes from the Ronier and Mimosa oilfields in Chad’s southern Bongor region via a 193 mile-long pipeline, which China also helped to finance.
In either case, the Chinese company holds 60% of the equity, to the government’s 40%.