Monday, May 17, 2010

China pens $23b Nigerian refinery deal
CHINA has agreed a provisional deal to build three new refineries and one new petrochemical complex in Nigeria at a cost of $23b.

The state oil company Nigerian National Petroleum says in a statement that it has “executed a memorandum of understanding” with China State Construction Engineering (CSCE) to secure funding from a consortium of banks and insurance players as it seeks to reduce its imports of refined products.

The deal is in its earliest stages with no information on construction schedules or operational responsibility but plans are to add 750,000 bbl/d of refining capacity, which Nigeria hopes will “stem the flood of imported refined products into the country, currently estimated at $10b/y.”

Nigeria wishes to use the petrochemical complex to convert its wealth of energy resources into gas-based fertilisers to strengthen agricultural production, as well as produce polymers and solvents.

China’s involvement in the deal runs counter to western energy majors who have been reluctant to invest in Nigerian refining capacity as the state heavily subsidises fuels, making refinery profits marginal. This has not deterred CSCE, which like many of its Chinese counterparts is working hard to secure access to foreign energy and mineral resources.

Nigerian National Petroleum says that CSCE desires to expand its presence on the African continent, and specifically “establish a footprint firmly in the Nigerian oil and gas landscape.”

Nigeria is looking to auction its offshore oil fields to foreign companies but hasn’t yet revealed when the process will begin.

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