NNPC, China’s CSCEC to sign MoU on $28.5bn projects, Wednesday

20 December 2011, Sweetcrude, ABUJA – The Nigerian National Petroleum Corporation (NNPC) and the China State Construction Engineering Corporation (CSCEC) will on Wednesday sign a Memorandum of Understanding (MoU) for the construction of greenfield refineries and a petrochemical plant in Nigeria.

This is part of efforts by the Nigerian government to push up the country’s crude oil refining capacity to one million barrels per day.

The plan is for the building of two greenfield 300,000 barrels per day refineries – one each in Lagos and Bayelsa States – and a 150,000 b/d refining plant in Kogi and a gas refining/petrochemical plant based on the gas pipeline network envisaged under the Gas Master Plan.

The 750,000 barrels per day capacity coming from the new plants will, together with the current 445,000 barrel per day refining capacity of the nation’s existing refineries in Warri, Kaduna and Port Harcourt, push Nigeria’s oil refining capacity to over a million barrels.

Eighty per cent of the projects cost is expected to be funded with a term loan provided by the China Export Credit Insurance Corporation (SINOSURE) and a consortium of Chinese banks led by the Industrial and Commercial Bank of China, the world’s largest bank.

The estimated cost of all the four projects is put at $28.5 billion in which NNPC was to foot only 20 per cent as equity contribution.

The time frame for the take-off of the projects could not be realised following the delay in conducting of the feasibility studies by the NNPC.

The corporation had sought for a one-year extension to be able to carry a thorough soil testing and had vide a letter written by the Engineering and Technology Director at the corporation, Mr. Adebayo Ibirogba, given the update on the feasibility studies for the three refineries as follows; that detailed feasibility study for Lagos Refinery would take place on July 2011, pre-feasibility study for Bayelsa Refinery on July 2011 and that of Kogi Refinery on July 2011.

It also stated that the detailed feasibility study for Bayelsa Refinery would take place on October 2011, while that of Kogi would be carried out on October 2011 with executive summary report for all the three fixed for October 2011.

NNPC Group Managing Director, Mr. Austen Oniwon, had in August revealed that the detailed feasibility studies on the greenfield refineries had been completed, adding that a team from the corporation was billed to travel to United Kingdom to meet with the consultants to review the feasibility study.

“Thereafter, we will engage the financiers and the contractors to also examine the study and then we will be able to determine appropriately the type and the configuration of the greenfield refineries,” he said.

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