October 30, 2024 [Reuters]- Angola’s Cabinda oil refinery is set to begin production by April, as it completes its first phase just ahead of schedule but over budget, the CEO of Gemcorp Holdings Limited, the project’s biggest shareholder, told Reuters on Tuesday.
The refinery will be commissioned in January-February, with its first supplies of fuels reaching the local market in March-April, Atanas Bostandjiev, founder and chief executive of Gemcorp, said on the sidelines of the Financial Times Africa Summit. The company owns 90% of the refinery.
The new project, which will be Angola’s second oil refinery, will help make sub-Saharan Africa’s No. 2 oil producer less reliant on costly fuel imports, especially as Angola aims to eliminate fuel subsidies.
Investment for the first phase reached about $500 million-$550 million, Bostandjiev said, higher than the initial $473-million estimate, as costs rose due to the COVID-19 pandemic and inflation.
The previous target for completion of the first phase was July 2025.
The greenfield project will refine Angolan Cabinda crude, supplied by state-controlled Sonangol at a rate of 30,000 barrels per day (bpd), and will supply 5-10% of the country’s needs, Bostandjiev said. Sonangol is a 10% shareholder in the project.
A second phase will take crude processing capacity up to 60,000 bpd and bring a diesel and jet fuel-producing hydrocracking unit online, some 1-1/2 to two years after the refinery starts up.
“Angola currently exports 98% of its crude and imports almost 100% of its refined products from Europe, so imagine how inefficient this whole system is,” Bostandjiev said. China is the biggest buyer of Angolan crude, accounting for nearly 60% of 2023 exports, according to Kpler data.
Once on stream, the refinery will initially export fuel oil and naphtha which cannot be processed locally, while supplying the local market with diesel and jet fuel, Bostandjiev said.
Funding for the second phase has not been finalised yet, Bostandjiev said, adding that a final decision is expected in April or May once the plant is online.
The refinery could also export some fuel to the Democratic Republic of the Congo in later phases, Bostandjiev said.
Gemcorp, a London-based emerging markets investment firm, was the refinery’s sole Western investor, which Bostandjiev attributed to ESG frameworks obstructing many Western institutions from investing in oil and gas projects.
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