Page 8 - DMEA Week 13 2020

DMEA REFINING DMEA
Angola delays picking Soyo refinery contractor
ANGOLA
The project is one of several planned new refineries in Angola.
ANGOLA’S government has delayed issuing a tender award for the construction of an oil refin- ery at the port of Soyo because of the coronavirus (COVID-19) pandemic.
In a statement, its ministry and mineral resources said that the date announcing the winner of the tender had been postponed from March 31. Angola declared a state of emergency on March 27 in response to the virus.
The ministry said it had shortlisted nine pro- posals from international contractors to erect the 100,000 barrel per day (bpd) refinery in Febru- ary. They were submitted by SDRC, Jiangsu Sin- ochem Construction, Quantem Consortium, CMEC, AIDA and VSF, Tobaka Investment Group, Atis Nebest Angola, Satarem, Gemcorp Capital and CPP.
The contractors offered to build the facility in periods ranging from 16 to 40 months. Refining operations are slated to start in 2023.
Africa’s second-biggest oil producer after Nigeria has sought for years to boost its refining capacity in order to ease fuel and power short- ages. The country currently has only one refinery – a 65,000 bpd plant in its capital Luanda that can cover around 20% of national fuel demand. It aims to build three new refineries in Cabinda,
Lobito and Soyo, but these projects have faced significant delays because of problems finding investors.
National oil company (NOC) Sonangol awarded a contract to Hong Kong-based consor- tium United Shine last year to build the 60,000 bpd Cabinda refinery. But it terminated the deal in December, according to local press, citing the group’s failure to prove it had the financial capa- bility to see the project through.
Sonangol went on to sign a preliminary agreement on financing and implementation of the project with London-based investment firm Gemcorp Capital last month, and has said it is looking for other investors as well.
Cabinda is due to start up by the end of 2021, initially processing only 30,000 bpd of crude, before reaching its full capacity two years later.
Lobito is the largest of the three planned refin- eries, with a throughput capacity of 200,000 bpd. The project, with a $10bn budget, was initiated in 2012 but shelved four years later because of the oil price crash. Sonangol renewed its search for investment partners in late 2017.
All three refineries are expected to be con- structed on a build-operate-transfer (BOT) basis. ™
PETROCHEMICALS
Sasol to cut output amid lockdown
SOUTH AFRICA
SOUTH African chemicals group Sasol has said it will continue to run its refineries during coro- navirus (COVID-19) lockdowns, but that output at some plants will be cut.
The company has also warned that its finan- cial results this year will be affected by the col- lapse in commodity prices and a recent credit ratings downgrade.
South Africans have been ordered by the government to remain at home until April 17, in order to combat the spread of the coro- navirus. In a statement on March 31, Sasol said that most of its products were classi- fied as essential, so would continue to be manufactured.
Sasol said it had formulated an alcohol blend to meet the growing demand for hand sanitiser, and it is also co-ordinating steps with the gov- ernment to prevent the virus’ spread.
Sasol’s overseas projects – the central gas
processing facility in Mozambique and the North American Lakes Charles Chemicals Pro- ject (LCCP) in the US – have not been affected by the crisis, it said.
The company added that there were risks to its production, construction and supply chains, and that its 2020 earnings could take a hit. S&P Global Ratings and Moody’s have just slashed Sasol’s credit ratings, to BB with a negative out- look and Ba2 under review for a downgrade respectively.
These downgrades will cost Sasol some $10mn per year, because its debt is indexed to its credit rating. Sasol has hedged 80% of its syn- thetic fuels at a price of $32 per barrel during the fourth quarter of the year.
Sasol still plans to proceed with a $2bn divest- ment programme, and a potential $2bn equity raise. The company aims to generate a further $2bn from cutting costs. ™
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Week 13 02•April•2020