Angola strikes new deal for grassroots Cabinda refinery

Nov. 16, 2020
The government of Angola, through Sonangol EP, and partner Gemcorp Capital, have taken final investment decision to proceed with the country’s plan to construct a greenfield refinery on the Malembo plain, 30 km north of Cabinda.

The government of Angola, through state-owned Sonangol EP, and new partner Gemcorp Capital LLP, a London-based investment management firm, have taken final investment decision (FID) to proceed with the country’s long-planned project for construction of a greenfield refinery on the Malembo plain, 30 km north of Cabinda, in the country’s province of Cabinda (OGJ Online, June 4, 2019).

As part of the FID reached in late October, Gemcorp (90%) and Sonangol (10%) will invest $220 million to build Phase 1 of the proposed refinery, which alongside a 30,000-b/d crude distillation unit, desalinator, kerosine treating unit, and auxiliary infrastructure, also will include construction of a conventional float anchoring system, pipelines, and a more than 1.2-million bbl storage terminal, Sonangol said.

The FID also covers a $700-million investment for construction of Phases 2 and 3, which will add another 30,000 b/d of crude processing capacity, as well as units for catalytic reforming, hydrotreating, and catalytic cracking that will transform the site into a full-conversion refinery, according to the operator.

With formal construction of the site—including land clearing and preparation—started in March 2020 and completed in August 2020 and long-lead items for the project ordered in November 2020, Phase 1 of the 60,000-b/d refinery is scheduled to enter operation in first-quarter 2022, Sonangol and Gemcorp said.

Phases 2 and 3 of the refinery are scheduled to be completed in second-quarter 2023 and second-quarter 2024, respectively, according to Sonangol’s 2019 annual report released in late-September 2020.

As the first private investment of its kind in Angola, the FID for the refinery aligns with the Angolan government’s main strategic objectives of increasing domestic crude processing capacity to help considerably reduce the country’s dependence on expensive imports of refined products, encouraging increased foreign investment, and creating employment opportunities for Angolans, said Sebastião Gaspar Martins, Sonangol’s chairman.

The revised partnership for the Cabinda refinery follows Sonangol’s June 2019 agreement with the United Shine consortium for the project, which Sonangol terminated later in the year following a contractual breach by the consortium, Sonangol said in its 2019 annual report.

Once fully operable, the Cabinda refinery will produce gasoline, diesel, LPG, fuel oil, Jet A1, and kerosine, according to Sonangol and Gemcorp.

Additional refining projects

Alongside the grassroots Cabinda refinery, Angola also is advancing work on upgrading its existing 65,000-b/d refinery in Luanda, as well as development of grassroots refineries in Lobito, Benguela Province, and Soyo, Zaire Province.

In its 2019 annual report, Sonangol said its previously announced project to increase gasoline production capacity via installation of two new processing units as well as other utilities and offsites remains under way at the Luanda refinery (OGJ Online, June 6, 2019).

The state-run company also said development remains ongoing for its earlier announced project to build a new refinery in Lobito (OGJ Online, Dec. 3, 2013). Temporarily suspended in 2016, the project currently is under reassessment based on new technical and financial assumptions following completion of an updated economic and financial feasibility study completed in 2020.

Following the revised feasibility study—which took into account the possibility of building the Lobito refinery in a single phase or in two phases, with a first-phase capacity of 100,000 b/d  and a second-phase capacity of another 100,000-b/d capacity, as well as inclusion of petrochemical production capacity—Sonangol said it has selected its preferred configuration for the future refinery and will soon update front-end engineering and design for the project, on which JGC Corp. of Japan plans to deliver engineering, procurement, and construction.

In his state-of-the-nation address delivered on Oct. 15, Angola’s President João Manuel Gonçlaves Lourenço said the country also has launched a tender for construction of a 100,000-b/d refinery in Soyo. While further details on the Soyo project were not disclosed, Lourenço did confirm the tender remains under way.

A timeline for completion of the Luanda, Lobito, and Soyo refining projects have yet to be revealed.