Gemcorp Seals $335MM Loan for Angola Oil Refinery
SEATTLE (Oil Monster): Gemcorp Holdings Ltd. has fulfilled the requirements for a $335 million borrowing for a refinery project in Angola that is planned to meet about 10 percent of the local demand for petroleum products.
The funding facility led by Africa Finance Corp. (AFC) and African Export-Import Bank (Afreximbank) accounts for nearly 71 percent of the $473 million cost for the Cabinda Oil Refinery, according to a joint press release by the parties Thursday.
The financial close comes three years after state oil company Sonangol EP canceled the initial contract awarded to Hong Kong-based United Shine reportedly due to failure to meet capital and technical requirements. Gemcorp is now the majority shareholder in the project with Sonangol as the partner, according to the media statement.
“The credit facility covers the first phase of the project and paves the way for construction, which will enable the processing of 30,000 crude oil barrels a day”, the announcement said. The second phase doubles the throughput to bring the output capacity to 60,000 barrels a day.
“Upon completion of the first phase, the refinery is envisioned to deliver ~10 percent of the country’s total demand for refined oil products, increasing to ~20 percent upon completion of phase 2, while creating over 1300 direct and indirect jobs in the process”, the statement said.
The project would also curb the Southern African country’s reliance on imports for its energy needs, it said.
While oil and gas have been among the top exports of Angola, a member of the Organization of Petroleum Exporting Countries (OPEC), it relies on importation for refined products. It has been shipping most of its crude abroad while importing more refined products than it produces, according to the latest data, through 2019, from the African Energy Commission. Angola produced nearly 242,400 kilotons of petroleum that year, exporting about 122,500 kilotons. It imported over 98,300 kilotons of oil products and exported around 73,400 kilotons of oil products in 2019, according to the data.
Angola’s output of petroleum products averaged 40,000 barrels per day (bpd) in 2021 with a refining capacity of 80,000 barrels per calendar day, according to the latest OPEC data. It exported 29,000 bpd of oil products in 2021. Out of the 1.124 million bpd of crude it produced that year, Angola exported 1.08 million. It also shipped overseas approximately 179.54 million cubic feet of natural gas.
“The refining of crude oil and distribution of its derivatives remain well below domestic demand”, said the USA International Trade Administration in a country report August 5, 2022. “Angola is a leading producer in the continent – and has recently surpassed longtime leaders Nigeria and Algeria – yet is heavily dependent on imported refined petroleum. The country spends over $ 2 billion on petroleum imports annually.”
But the Cabinda refinery project “stands to make Angola energy independent while leveraging its natural resources for the benefit of the community and the wider economy”, Gemcorp chief executive Atanas
Bostandjiev said in the funding announcement, calling the refinery “monumental life-changing infrastructure”.
AFC president and chief executive Samaila Zubairu commented, “We are delighted to announce the successful financial close of this groundbreaking refinery project”.
“This structural transformation project is in line with our vision to capture and retain value in the Angolan economy while reducing carbon emissions by eliminating two wasteful voyages involved in exporting crude oil as raw materials and importing it back as refined product”, he added.
The refinery will maximize value for Angolan oil “while contributing to a reduction in greenhouse gases by reducing the need to transport crude and refined products to and from Africa”, Afreximbank president and chair of the board of directors Benedict Oramah said.
“We look forward to boosting intra-African trade through the supply of refined products from Angola to near markets”, Oramah added.
Lenders also include the Arab Bank for the Economic Development in Africa, Banco de Fomento Angola and the Industrial Development Corp. of South Africa.
Angola has 2.516 million barrels of proven oil reserves and about 10.63 trillion cubic feet of proven natural gas reserves, according to OPEC.
But the country has yet to unleash the potential of its oil and gas industry due to bureaucratic and financial hurdles. “Angola’s oil and gas sector business environment remains one of the most difficult to navigate even after policy changes had been introduced into the sector”, the USA ITA report said. “Immense industry barriers and macroeconomic threats persist, and hamper even reputable multinationals and the smartest local company willing to enter the sector.”
Courtesy: www.rigzone.com