Page 4 - DMEA Week 49

DMEA Commentary DMEA
Sonangol cancels
Cabinda deal,
extends Soyo bidding
Angola’s refining sector has come under scrutiny again, with Sonangol cancelling the development contract for the Cabinda facility and extending the bid deadline for the unit at Soyo.
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What:
The Angolan refining sector has suffered further disappointment, but this is perhaps unsurprising, given the lack of profile of the partner selected.
Why:
The obscure United Shine consortium has had its contract for the 60,000 bpd Cabinda refinery cancelled, with a UK- based alternative having signed an MoU.
What next:
Bidding has been extended for the Soyo refinery, with Luanda frustrated by the lack of appropriate bidders.
ANGoLAN state oil firm Sonangol revealed last week that it had cancelled a contract with the obscure United Shine consortium for the construction of a refinery in Cabinda Province.
In a statement, the company said it had termi- nated the deal in late october after determining that the consortium had failed to meet its obliga- tions. More specifically, it said that United Shine had not managed to provide concrete proof of its ability to finance and execute the project.
Additionally, it said that United Shine had not submitted the documentation needed to demonstrate its ability to complete the project within 24 months, as stipulated in the contract. The group had not produced commercial, finan- cial or technical studies or completed the docu- ments needed to secure approval of its plans, it explained. Nor did it acquire the titles or doc- uments needed to prove its ownership of the facility.
In June, Sonangol announced it had signed a partners’ agreement with the United Shine consortium for the construction of a high-con- version refinery in the Cabinda exclave. The lit- tle-known group was chosen for the job in late 2018 after a Sonangol tender that ran through- out 2017, taking a 90% stake in the facility, with Sonangol Refining (Sonaref ) retaining the remainder. The greenfield facility in Cabinda Province will have a nameplate throughput capacity of 60,000 barrel per day (bpd) and will produce gasoline, diesel, fuel oil and Jet A1.
Luanda has yet to reveal full details of its con- tract with United Shine, nor has it named the members of the consortium publicly or stated the value of the project. Sonangol did say last week, though, that the cancellation of the deal with the group had allowed it to begin negotia- tions with another potential partner, Gemcorp Capital, an investment management firm based in the UK.
The parties signed a memorandum of under- standing (MoU) on the execution and financing
of the project on october 30, it said.
Gemcorp added that the facility would be
built on the Malembo plain, around 30km north of the provincial capital. The London-headquar- tered company claims it currently has $1.2bn in assets under management.
Considering Sonangol’s previous difficulties in bringing its own refining projects to fruition, the addition of a financial partner still appears to leave a significant gap in terms of the technical knowhow.
Refined ambition
The 2017 tendering process focused on modern- ising and expanding Angola’s refining capacity, which is currently limited to the ageing 38,000 bpd Luanda refinery near the capital. The larg- est part of this broader project centres on the planned Lobito refinery in Benguela Province.
Sonangol reported that 68 companies or con- sortia had expressed an interest in carrying out the construction of either Cabinda or Lobito; this was cut down to seven bidders for each refinery.
No award has yet been made for Lobito, but Eni signed a wide-ranging deal with Sonangol in November last year that would see the Italian firm provide technical assistance to improve efficiency at the Luanda unit, as well as support- ing the development of the Lobito and Cabinda facilities.
Fellow Italian firm Maire Tecnimont announced on June 6 that its subsidiary KT – Kinetics Technology – had been awarded an engineering, procurement and construction (EPC) contract by Eni’s local arm, relating to the Luanda unit.
The $200mn contract includes EPC activi- ties relating to two refining process units – the naphtha hydrotreater, which includes naphtha splitting, and the catalytic reformer. The scope also includes some utilities and offsites, as well as integration with the existing facility.
The project envisages expanding gasoline
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w w w . N E W S B A S E . c o m Week 49 12•December•2019