Page 4 - DMEA Week 16 2022

DMEA COMMENTARY DMEA

Sonangol to proceed with Lobito

refinery as Zambia wants in

Angola’s state oil firm will proceed with its flagship refinery with even before it agrees
terms with a partner as the Zambian government looks to acquire a stake in the project.

AFRICA ANGOLAN NOC Sonangol has decided to announced in 2019 that it had received 68 offers
move forward with the construction of a new in a tender for the right to build the refinery, but
refinery at Lobito even though it has yet to thus far, no winner was ever announced.
WHAT: choose a partner for the project, according to A deal was signed in 2007 with Chinese
Sonangol remains in talks the company’s president Sebastião Gaspar Mar- refining giant Sinopec to develop and fund
with potential partners tins. The government of Zambia then moved the scheme while a front-end engineering and
for the 200,000-bpd to resume talks for Lusaka to take a stake in the design (FEED) study on the Lobito plant was
Lobito refinery, but has refinery as the neighbouring countries develop a completed by KBR in 2010.
said it will move forward cross-border pipeline. In 2011, the oil ministry said that Lobito
unilaterally. Meanwhile, Gaspar Martins also noted con- would process around 120,000 bpd during its
cerns about material shortages that could impact first stage of operation. Meanwhile, Engineers
WHY: the development of a refinery in the northern India Ltd was awarded a contract for FEED
The facility is the Cabinda exclave. validation and review of basic engineering and
largest of three planned design in mid-2015. BP, ENI and Total have all
refineries across the Sole development previously held talks with Luanda about possi-
country, though Sonangol Martins indicated on April 18 that Sonangol ble investment, and the Italian firm agreed in late
also cast concerns had chosen this strategy even though it had 2015 to review the plans.
over the development hoped initially to follow a different path. “At the
of another unit in the moment, we are deciding with which entities Zambian interest
Cabinda exclave. we are going to form the consortium and share- Shortly after the news of Sonangol’s plans to
holder, but we intend to move forward with the proceed with the project broke, Zambia’s energy
WHAT NEXT: project, albeit with initial funds from Sonangol,” minister revealed that he had asked Angola to
Zambia is keen to take he was quoted as saying by Ver Angola during a reopen the possibility for Lusaka to own a stake
part in the Lobito project press briefing. “The decision has been taken, and in the refinery. Posting on social media, Peter
as it seeks to improve this refinery is moving forward.” Kapala said he had lobbied Luanda with a view
long-term fuel supply Sonangol launched the tender during the to improving his country’s erratic fuel supply
security. summer, seeking private investors to take a situation.
70% share in the $6bn project which is seen “[The government] is also looking at syner-
being completed in 2025 or 2026. However, this gies with other economies in the region. We have
timeline was provided by project co-ordinator, successfully lobbied our Angolan counterparts
Guiomar Correia based on early physical works to re-open the opportunity for Zambia to own
beginning in Q2 2022. a stake in the Lobito Refinery project,” he said.
Start-up guidance has now been set at Sep- “On 14th April 2022, Minister of Commerce,
tember 2026-February 2027, while a front-end Trade and Industry Chipoka Mulenga signed an
engineering and design (FEED) study cover- agreement in Luanda, Angola, to actualise this
ing a single-train facility with a hydrocracker is partnership. This opportunity will guarantee
expected to be completed by the end of this year. Zambia consistent access to the supply of petro-
In October, five bids were submitted – by leum on a preferential basis.”
China’s LANPEC Technology Ltd and US-based The Lobito tie-up would accord with a mem-
International Business Development Group orandum of understanding (MoU) signed
(IBD); Gemcorp and the local Omatapalo between the countries in May last year to carry
Engenharia & Construção; Hull Blyth Man- out studies for the construction of a cross-border
power, AVIC International Beijing Co. and refined product pipeline.
China Huanquiu Contracting & Engineering The deal provided for the two sides carry out
Co.; UK-based Layher Ltd; and GazMin Interna- feasibility studies on the pipeline, a project that
tional of the UAE; and discussions with Sonan- may take up to two years to complete. Follow-
gol remain ongoing. ing the study which has been budgeted at up to
Angolan authorities began discussing plans $2bn, Luanda and Lusaka will discuss taking a
for the Lobito project around 20 years ago, but final investment decision (FID).
progress on the project has been slow. Sonangol The Angola-Zambia Oil Pipeline (AZOP),

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