REFINERY NEWS ROUNDUP: Refineries in Africa gradually coming back

  • Jun 29, 2020
  • Investing

Refineries in Africa are gradually coming back online as lockdowns ease.

The start-up comes with South Africa having gradually started to roll back restrictions, after having been under full lockdown since March 27. The country was set to enter “advanced level 3 lockdown” late June, which will allow dining in restaurants and the opening up of personal care services such as hair salons. According to mobility data from Apple, driving activity in the week ended June 15, was 39% below baseline activity, having improved from end-March when activity was 90% below the baseline.

–The Engen refinery in Durban, South Africa, is back online, the company confirmed. The refinery restarted on May 16. The refinery opted for a temporary shutdown starting on March 27 “due to forecast lower demand for petroleum products during the national lockdown.”

–South Africa’s Cape Town refinery, known as Caltex and which has been undergoing maintenance since February, is looking to restart sometime in early July, as domestic demand for refined oil products gradually recovers amid easing movement restrictions. The refinery had initially shut its units in February for a scheduled maintenance, but the subsequent nationwide lockdown in March led to a delay of works. The facility had originally targeted an end-April restart. According to media reports, the province of Cape Town is notably the hardest hit in South Africa, making up nearly 60% of the nation’s coronavirus cases. However, even as COVID-19 cases in the country continue to rise, lockdown restrictions have started to ease since mid-May.

–Chad’s Ndjamena refinery in Djarmaya temporarily suspended processing activities because of overproduction.

–Sasol’s Natref refinery in South Africa was restarting after being idled for two months. The first units at the refinery started using feedstocks mid-June, followed by a phased commissioning of the remaining units, the company said. On April 9, the facility suspended operations indefinitely due to “an unprecedented decline in fuel demand,” Sasol said previously

–South Africa’s largest refinery, Sapref, has restarted after the completion of a shutdown.

–In other news, jet fuel exports from Egypt’s Midor refinery in Alexandria posted a seventh consecutive month-on-month decline in May as international flights remained grounded under the partial lockdown that was imposed in March, company data showed. According to local media reports, the coronavirus has hammered the country’s tourism industry, which accounts for 5% of economic output. An earlier report by the International Air Transport Association in late April indicated that Egypt’s airline industry could see a $1.6 billion loss in revenue and 9.5 million fewer passengers in 2020 due to the pandemic. The country’s Civil Aviation Minister Mohamed Manar Enaba said June 14 the country will reopen its airport to international traffic on July 1 in three provinces with the fewest COVID-19 infections – South Sinai, the Red Sea and Matrouh.

Near-term and future maintenance

New and revised entries

–South Africa’s Cape Town refinery, known as Caltex and which has been undergoing maintenance since February, is looking to restart sometime in early July, as domestic demand for refined oil products gradually recovers amid easing movement restrictions. The refinery had initially shut its units in February for a scheduled maintenance, but the subsequent nationwide lockdown in March led to a delay of works. The facility had originally targeted an end-April restart.

Existing entries

–Nigeria is racing to upgrade its four ailing refineries after the coronavirus pandemic is likely to delay repair works, officials at Nigerian National Petroleum Corp. said. NNPC was hoping to raise operating capacity at the facilities to their full capacity of 445,000 b/d by 2022 and end gasoline imports by then but this looks very tricky now. Nigeria’s refineries, which include the northern Kaduna refinery, Warri refinery and the two plants located in Port Harcourt, have all been shut, with repairs initially planned to start in the second quarter. NNPC, which manages the refineries, first shut the two refineries in Port Harcourt in March 2019 after it secured the service of Italy’s Maire Tecnimont to handle the overhaul of the facilities, with oil major Eni appointed as technical adviser. The other two refineries — the 125,000 b/d Warri refinery and 110,000 b/d Kaduna refinery — were shut in December 2019.

–The refinery in Pointe Noire, Republic of Congo, will go into turnaround in 2021 but dates have not been finalized.

–Sudan’s Khartoum refinery is set to carry out works from around mid-September, CITAC Africa reported. The works will last around 75 days.

–Cameroon’s Limbe refinery, which suffered from a fire at the end of May 2019, remains offline, according to sources. Local media reported the restart is not expected until 2021. During a Russia-Africa summit officials said that Russian companies could get involved in the reconstruction of the plant.

–Libya’s Zawiya oil refinery has been forced to shut as domestic oil output has plunged due to a blockade which began on January 18, state-owned National Oil Corp. said. Both CDUs, each with 60,000 b/d capacity, have been affected. In late December, the refinery was the target of an air strike but the refinery has been operating at around 60,000 b/d over the past six months, with only one of its crude distillation units operating.

–Libya’s Ras Lanuf remains offline without any timeline for its restart. The refinery was shut in 2013.

–Because of upgrades, Zambia’s Indeni is unlikely to require extensive maintenance until 2022, although minor outages to facilitate routine servicing of equipment may be required. However the refinery is offline since March when it started a maintenance program. The government began the process of selling the refinery in late 2017. Privately owned Sahara Group said it is hoping to buy a 70% stake in the state-owned refinery.

–Tema Oil Refinery is now processing crude with a single furnace and the daily throughput is around 25,000-26,000 b/d, or around 55% of original capacity.

Upgrades

Existing entries

–Nigeria is racing to upgrade its four refineries after the coronavirus pandemic is likely to delay repair works, officials at Nigerian National Petroleum Corp. said. NNPC was hoping to raise operating capacity at the facilities to their full capacity of 445,000 b/d by 2022 and end gasoline imports by then but this looks very tricky now. Nigeria’s refineries, which include the northern Kaduna refinery, Warri refinery and the two plants located in Port Harcourt, have all been shut, with repairs initially planned to start in the second quarter. NNPC, which manages the refineries, first shut the two refineries in Port Harcourt in March 2019 after it secured the service of Italy’s Maire Tecnimont to handle the overhaul of the facilities, with oil major Eni appointed as technical adviser. The other two refineries — the 125,000 b/d Warri refinery and 110,000 b/d Kaduna refinery — were shut in December 2019.

–The refinery in Pointe Noire, Republic of Congo, has delayed its upgrade program until 2022 due to a lack of funds, which had included plans to build a fluid catalytic cracker. The objective behind the expansion was to reduce its current production of fuel oil from 40% and to meet cleaner fuels standards. –The Republic of Congo’s refinery in Pointe Noire is planning to build a fluid catalytic cracker before 2022.

–The European Bank for Reconstruction and Development (EBRD) approved a $50 million loan for an upgrade of Egypt’s Suez refinery aimed at introducing cleaner fuel and reducing CO2 emissions. It was the second loan after a $200 million loan by the EBRD which was aimed to “increase the flexibility of the plant’s crude intake and allow for the production of higher quality fuels and lower sulfur fuels.”

–Italy’s Kinetics Technology has been awarded a contract to build a fluid catalytic cracker at Angola’s sole oil refinery in Luanda. The unit would take around two and half years to complete. Sonangol is working with Eni for the refurbishment of the Luanda plant. The construction of the fluid catalytic cracker at the Luanda refinery will enable it to produce 1,200 mt/day of gasoline, up from current output of 380 mt/day. The unit is expected to come online mid-2021.

–The expansion program at Egypt’s state-owned Middle East Oil Refinery (Midor) near Alexandria, is on track for 2022, which will push capacity to 160,000 b/d. Once the revamp is complete, the refinery will produce Euro 5 specification refined products. EGPC is in the midst of expanding other refineries, including the upgrade of Assiut by the Nile in Middle Egypt, which was expected to be complete by April 2020. The upgrade at Assiut includes the installation of 880,000 mt/year continuous catalytic reforming and isomerization complex, a 400,000 mt/year vapor recovery unit and 2.3 million mt/year hydrocracker.

–Cote d’Ivoire’s SIR has secured a Eur577 million ($657 million) debt financing deal from Africa Finance Corporation, or AFC, which will help fund the upgrade of the refinery.

–Senegal’s Dakar refinery is planning to increase capacity to 1.5 million mt/year.

Launches

Existing entries

–Benin is looking to launch a project for the construction of a new refinery, according to a local media report. The project has been presented at the government meeting. A committee will look at the feasibility studies for the project and will also analyze the market prospects until 2030. The project will be developed as public private partnership. Apart from supplying the local market the refinery would also contribute to supplying other countries in the region.

–Angola’s new refinery project in the Cabinda province is expected to receive a final investment decision, with formal site construction set to begin in August, Gemcorp Capital said. Angola urgently needs to cut its reliance on imported fuels, and the government has been working to construct a new plant, along with expanding capacity at its existing refinery in Luanda. Gemcorp signed a contract with state-owned Sonangol in January to build the 60,000 b/d capacity refinery. The first phase of the Cabinda refinery project will be complete by late 2021, starting with a capacity of 30,000 b/d, Gemcorp said in a statement. An additional 30,000 b/d of capacity will be added in a second phase, along with installation of a reformer that will convert straight run naphtha to gasoline. It also plans to add a hydrocracker by 2023. Gemcorp said the preliminary stage of construction, which comprised of land clearance and site preparation for 38 hectares of land along with the Front End Engineering and Design, is complete.

–Algeria’s Energy Minister Mohamed Arkab announced in Algiers in June 2020 the launch in 2022 of the Tiaret refinery project. Arkab said the energy sector has scheduled the completion of three new refineries at Hassi Messaoud, Biskra and Tiaret, with a capacity of 5 million tonnes each, stating that the technical, architectural and land development studies were completed at the end of 2017. According to the Minister, these refineries will be carried out as part of the Government’s plan for the period 2021-2024. Sonatrach signed with the Spanish and Korean consortium Technicas Reunidas-Samsung Engineering the contract to build the new Hassi Messaoud refinery. The consortium is expected to deliver the refinery in the first half of 2024. In addition to the refinery projects, a working group made up of experts has been created at the level of the Ministry of Energy to examine the view of increasing the production capacities of current refineries.

–The startup of the Dangote refinery in Lagos, Nigeria — set to be Africa’s largest — is likely to be delayed until late 2021, sources close to the matter said. Strict coronavirus lockdown measures in place in Lagos has had “some dampening effect on progress,” according to one source. “Management, however, have made maximum provisions to moderate this effect, while all attempts will made in future to recoup much of whatever time is lost now.” The refinery’s chief executive, Devakumar Edwin, previously said the plant would be ready by early 2021 and that it would reach full capacity within six months. But due to the lockdown measures in place work has been affected and the launch date will be pushed back to later in the year, sources added. The startup date of this refinery has been repeatedly delayed, after the company first announced the project in 2013.

–Houston-based VFuels Oil & Gas Engineering will undertake a feasibility study for the launch of 5,000 b/d modular oil refinery at Punta Europa in Equatorial Guinea, the country’s ministry of mines and hydrocarbons said. Earlier, the country’s minister for mines and hydrocarbon Gabriel Obiang Lima said the country was hoping to build two modular refineries in the country, one at the Punta Europa complex located on Bioko Island, and the other at Cogo in the mainland. Equatorial Guinea planned to start construction of the two modular refineries, which are expected to eventually reach a capacity of at least 20,000 b/d, by the end of 2020.

–Angola’s oil ministry has postponed the announcement of the winner of the Soyo refinery tender due to the coronavirus outbreak. The winner of the tender for building the refinery will be announced after the coronavirus outbreak is controlled, according to local media reports. The company to build the new Soyo refinery was due to be announced in March. Out of 31 interested companies, 15 have submitted bids in a tender for the construction of Soyo, the country’s ANGOP news agency reported previously. Nine of the bids have been validated. The tender was launched in October. The refinery is expected to be completed in about three to four years. The selected company or joint venture will finance the construction of the plant on a build-operate-transfer (BOT) basis. The new plant, along with ones under consideration in Lobito in Benguela province and in Cabinda, is part of the government’s plan to transform its downstream sector. This also involves refurbishing the refinery in Luanda.

–Safinat, the main investor and implementer of the Bentiu refinery project in South Sudan, said that the refinery has not started yet. Construction of the refinery in the Unity oil field started in August 2013 and precommissioning and production began in 2014, although it was subsequently damaged during military action. Restoration works on the site started in December 2018 but it was dependent on assistance from the government to minimize risks. South Sudan officials had previously said they expected the refinery to be operational in 2019.

–Completion of the Albertine Graben refinery in Uganda is on schedule for 2023, Robert Kasande, the permanent secretary at the energy ministry, said. Uganda officials said last year that completion had been pushed back to 2024, following delays in reaching agreement on prerequisites for the project’s final investment decision. However, the timeline has been brought forwards after preliminary front-end engineering design studies indicated that the cost for building the plant has come down from $4 billion to $3.5 billion. One of the conditions for investors to reach a FID — a requirement for the government to start work on product pipelines — has also been met. The government has secured the corridor for associated infrastructure, such as a products pipeline that will run 213 km to the Buroba storage terminals. Construction of a multi-product pipeline will start in the second half of 2020, the energy ministry said in a report. The FID, which was initially planned for 2019, is now due to be finalized in the second quarter of 2020, after the development consortium concludes its FEED study, currently expected for June.

–Nigeria hopes to have its first modular oil refinery, built in the restive Niger Delta region, come on stream in May 2020, the oil ministry said. Modular refineries are crude oil processing facilities with capacities of up to 30,000 b/d and these are being built as part of plans to curb oil theft and promote peace in the country’s main oil producing region. According to the ministry, the Waltersmith Modular Refinery in Ohaji/Egbema, in southern Imo state, will consume 5,000 b/d of crude in the first phase, producing gasoline and diesel. The plant’s production capacity will be subsequently increased to 25,000 b/d of crude and condensate and will produce in addition LPG, kerosene and aviation fuel.

–State-owned Nigerian National Petroleum Corp. said it hoped to take a final investment decision for its condensate refinery project by July 2020. NNPC signed the front-end engineering design for the construction of the plant — which will be located in the Niger Delta — with engineering firm KBR. NNPC is partnered in the project by indigenous oil producer Seplat Petroleum. NNPC first announced in August 2018 plans to build a condensate refinery with capacity to refine 200,000 b/d of the condensate oil produced by the country.

–Africa Finance Corporation has signed an agreement with Brahms Oil Refineries Ltd to co-develop a refinery and storage terminal in the West African country. The deal means AFC will work on the development and subsequent financing of a petroleum storage and associated refinery project in Kamsar, Guinea. This will include a 12,000 b/d modular refinery, a 76,000 cu m crude oil storage terminal, a 114,200 cu m storage terminal for refined products, and ancillary transportation infrastructure. Guinea currently has no refineries and is entirely dependent on imports from neighboring Ivory Coast and Senegal for its fuel needs.

–Russian state development bank VEB has signed investment cooperation deals with African organizations including on financing a refinery in Morocco. The deals were signed during a Russia-Africa Summit. VEB said the memorandum on the oil refinery in Morocco was signed with the Russian Export Group and Morocco’s MYA Energy, part of the Marita Group. The refinery has a planned capacity of up to 5 million mt/year. Morocco’s sole refiner Samir was forced to halt processing at the Mohammedia plant in 2015 after crude oil deliveries were delayed due to financial problems. Since then attempts to resume operations or find an investor have been unsuccessful.

–Sonaref’s Joaquim de Sousa Fernandes, chairman of the executive council, said that the Lobito refinery in Angola is aimed for completion in 2025. The construction of the Lobito refinery has been frozen due to high costs. Sonangol has been under pressure to build a new refinery as it heavily depends on imports for its fuel requirements, but it canceled the Lobito project in 2016. It has indicated plans for building Lobito have been revived, for a 200,000 b/d plant.

–A consortium of Russian investors is planning a $4 billion project for a new refinery in Northern Zambia at the site of the country’s aging state-owned Indeni plant.

–Russian state-owned exploration company Rosgeologia is considering building the Red Sea Coast refinery in Port Sudan, which would supply landlocked countries in Africa. Sudan had begun discussions to develop a 200,000 b/d refinery on its Red Sea coast. The project’s timeline has not yet been disclosed. The only refinery currently operating in the country is the Khartoum, after the Port Sudan refinery closed in 2013 and was decommissioned.

–Nigeria has reached an agreement with neighbor Niger to build an oil refinery in a border town between Niger and Katsina state in northern Nigeria.

–Kenya is hoping to decide soon on the location for a new refinery in either Lamu or Mombasa.

–Ghana’s ministry of energy is in the process of submitting a proposal to build a new refinery in Tema. It will replace the 45,000 b/d Tema Oil Refinery. Separately, the government had set its sights on building a 150,000 b/d refinery in Takoradi.

Source: Platts