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Sonangol Signs Contract with China’s CNCEC to Build Lobito Refinery

Sonangol Signs Contract with China’s CNCEC to Build Lobito Refinery

The Angolan government today signed a contract with Chinese company CNEC to build the Lobito Refinery, in Benguela province, with a total investment value of six billion dollars (5.7 billion euros).

Sonangol, the state oil company, signed the Engineering, Procurement and Construction contract with the Chinese company China National Chemical Engineering (CNCEC), the Project Construction Supervision Contract with the American company KBR, and the Consultancy Services for Technical Support contract with the Angolan company DAR.

With an initial value of 12 billion dollars (11.4 billion euros), the project has seen a 50 per cent reduction in investment and is due to be carried out in 40 months.

The project, which had a preparation phase between 2012 and 2016 and an optimisation phase between 2018 and 2021, will begin this year.

Speaking to the press, the Minister for Mineral Resources, Oil and Gas, Diamantino Azevedo, said that the Lobito Refinery, with a processing capacity of 200,000 barrels per day, is a strategic project for the country and the region.

Despite the global climate, the minister emphasised, the Angolan government is determined to carry out the project, given its importance for the country’s economy and for economic diversification.

Diamantino Azevedo emphasised that the studies had been revised from a technical and economic point of view, achieving “a significant reduction”.

“In principle, we now have an established cost of around six billion dollars for the construction of the project,” he emphasised.

Regarding the participation of the neighbouring Republic of Zambia, which has also expressed an interest in taking part in this project, the Angolan government official said that discussions were continuing with the Zambian government “to see if the expression of interest actually materialises”.

“There are also other countries in our region that are looking at the possibility of becoming shareholders in this project, we will continue to talk to these countries and in due course we will be able to provide more information,” the minister announced.

During the signing of the contracts, Diamantino de Azevedo instructed Sonangol to immediately begin a feasibility study for the construction of a chemical component to utilise the refinery’s by-products.

“Hydrocarbons (oil and gas) aren’t just used for fuel, today many products in our daily lives and in various industries come from hydrocarbons, and here at this refinery we can study the possibility of using the by-products of oil derivatives that will arise in the refining process, so that we can build a petrochemical industry,” he emphasised.

The Minister of Mineral Resources, Oil and Gas stressed that, given that the Chinese company is also specialised in building the petrochemical industry, Sonangol should take advantage of this experience, “so that studies can be carried out into the economic viability of also installing the petrochemical component”.

According to the head of the Mineral Resources, Oil and Gas portfolio, the orientation was public in order to “engage the two companies more and make them aware that work is being done in this direction”.

A joint project between Sonangol and a private Angolan company, Diamantino de Azevedo also announced, is being carried out to build a plant to produce ammonia, one of the main components for fertilisers, and urea in the municipality of Soyo, Zaire province, using gas as the raw material.

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