The Lobito oil refinery will be Angola's largest refinery and a leading one in Southern Africa. What has prompted Sonangol to go ahead with this project?
Angola already has an oil refinery that produces 40.000 barrels per day of refined product. The new refinery we wish to build in Lobito will be processing 200.000 barrels per day. The decision to go ahead with this project is closely linked to the feasibility study conducted by Kellog (Purvin and Gertz) including the market study and of course the availability of crude oil in Angola.
Kellog has already carried out the feasibility study that concludes that there is a market for the Lobito refinery not only in Southern Africa but also on the East Coast of the USA, Brazil and Asia. This study was presented to the industry in Houston in December 2000. Since then we have received many letters of intent from companies willing to participate in the Lobito refinery project. Some of them are willing to take an equity stake, others would like to participate in the EPC (Engineering Procurement & Construction) and others would like to be off takers.
When will the construction of the Lobito refinery begin, and how many jobs will it create?
The basic engineering begins this year in 2001. The refinery will be assembled as from next year in 2002. The refinery will become fully operational in 2006.
The construction phase will employ between 3000 and 5000 workers. Later when the refinery becomes operational it will employ 1000 workers.
What can you tell us about Sonangol's equity partners in this project?
Sonangol is willing to take up to 40% of the equity. We are reserving 20% for technology partners, another 20% for financial partners, 10% for SADC (South African Development Community) member governments or companies and the remaining 10% for the private sector in Angola.
We signed a memorandum of understanding on 18 May in London with those companies whom expressed interest in the project that we have selected. We will then work closely with those companies until the formation of the new company.
What will be Sonangol's investment in the Lobito refinery?
We are only willing to take up to a 40% interest in the equity, but the entire project represents a $3 billion investment.
| What will be the impact on Sonangol's revenues when the Lobito refinery becomes operational?
We are planning to process in this refinery acids crude from fields like Kuito or Dalia. We believe that the value of this type of crude oil will increase by being processed than just being sold as a crude oil with the present differential.
How will the output of the refinery compare with others in the Southern African Region.
We have in the region large refineries like in Durban. The Lobito refinery will be able to bring products to fulfil the deficit detected in the region.
Is the Lobito refinery Sonangol's largest project so far?
We currently have two large projects: the new refinery and the LNG project. Each one represents an investment of $3 billion. The LNG project is a gas project and it is being carried out in a partnership between Sonangol and Texaco of the USA.
What sources of finances are you seeking for the Lobito refinery?
We are looking at three sources of financing: export agencies, multilateral creditors and private banks.
At what stage are the negotiations?
We did not start any negotiations yet. We are in the phase of selecting a group of companies as I referred previously, which takes us until the formation of the new company before we start the negotiations.
To finish off, what does the Lobito refinery project symbolise in terms of Angola's integration to the global economy?
In order to compete in the global economy we must create the adequate infrastructures in areas where we have a comparative advantage. If we do not develop our energy and use it towards obtaining better social conditions in Angola, we cannot talk of integration. We must therefore maximise the revenue we can get from our resources and building the Lobito refinery is an important step in that direction. |
