25 November 2017, London — Equatorial Guinea, OPEC’s newest member, is looking to build a $2 billion oil-refining complex that may be operated by Venezuela’s state-run crude producer PDVSA.
The refining complex in Equatorial Guinea is expected to be announced in January and take two years to be completed, Gabriel Obiang, Equatorial Guinea’s Minister of Mines, Industry, and Energy said in an interview while attending a natural gas-exporting summit in Bolivia Friday.
A refining deal with Venezuela stands to strengthen political ties between the two countries. It would allow for Equatorial Guinea’s light crude to be blended with Venezuela’s heavier grades, producing an oil supply that could make the planned refinery more competitive than others.
“We are studying the project and we have the financing — we just need an operator,” Obiang said. “PDVSA has a large number of trained workers, and a shared language is very important. We can bring their people here to work in one of the plants.”
Equatorial Guinea would supply 100 percent of the financing for the refining project. The plan comes as Venezuela is said to be seeking partners to finance its own ailing refineries, three of which are offline amid shortages of crude and a lack of investment, PDVSA union head Ivan Freites said Thursday.
According to Obiang, the refinery would allow Venezuela to send its crude to an African country like it already does to China or the U.S. “This allows the two countries to create greater political ties to sell crude and have other political benefits,” he said.
The refinery could eventually produce as much as 1 million barrels a day, Obiang said. Equatorial Guinea is also seeking to build a crude-storage complex.
According to Obiang, the refinery is one of three major oil investments that Equatorial Guinea will announce in January. He declined to provide details on the other two.
Equatorial Guinea’s crude production is falling 10 percent on average annually as the investment has stalled, he said. The West African country has made a discovery at one of its wells that could be developed further next year.
Obiang said Equatorial Guinea is in favor of extending the Organization of Petroleum Exporting Countries’ agreement to cut production, which is due to expire at the end of March. He was among a number of ministers from top crude-exporting countries including Qatar, Venezuela and Algeria gathered at the gas summit in Bolivia before meeting next week in Vienna to discuss extending oil output cuts.
*Amy Stillman & Laura Millan Lombrana – Bloomberg