Refinery’s planned processing capacity: 60,000 bpd
Overall project cost:USD 1 billion
Gemcorp’s shares in the project:90%
Sonangol’s shares in the project: 10%
Cabinda Refinery set to transform Angola’s downstreamJune 24, 2022
Angola has long been an oil producing nation. However, the country has been slow to develop its refining capacity. This is set to change with the start-up of the first phase of the Cabinda Refinery in 2022. When completed, the refinery will have a processing capacity of 60,000 bpd.
Despite being a significant oil producer, Angola still has only a minor downstream industry. The country’s refining needs are currently covered solely by the Luanda Refinery, which is able to meet only 20% of the total demand volumes, processing up to 65,000 bpd. This means that Angola’s imports as a share of oil products used in the country total around 80%, and the cost for importing refined petroleum products is now in the range of USD 1 billion per year.
Local companies also suffer from the country’s lack of refining capacity. Small oil companies “need a refinery to generate stable demand that can protect you from the instability of the oil price,” Carlos Amaral, general manager of ACREP, told The Energy Year. “If you have stable demand for 10 years, you can do all sorts of other investments – drilling more wells, optimising production and so on. When you have a fixed client, banks can lend you money.”
Consequently, one of the Angolan government’s main strategic targets is to increase the country’s domestic crude processing capacity. To do so, the government plans to develop several new refineries, beginning with the Cabinda Refinery.
THE NEW REFINERY: The Cabinda Refinery represents a fundamental step in Angola’s economic development. The increase in the internal capacity to process crude oil will reduce the country’s dependence on imports and positively impact its foreign exchange savings. It will also support a steady demand for onshore Cabinda-based oil producers that will be better able to plan their future operations with a permanent buyer.
Furthermore, it is the first concrete step of the government’s plan to boost its refining capacity. This plan has been in place for almost a decade with no improvements in capacity. Consequently, the planned start-up of the first greenfield refinery in 2022 is a very positive sign. The Cabinda Refinery is the first of three greenfield projects aiming to boost Angola’s refining oil capacity, the other two being the Soyo and Lobito refinery projects. The expanded refining capacity coming from Cabinda will ultimately save the Angolan government millions in export costs and allow it to better capitalise on domestic petroleum resources.
Project partner Gemcorp, a UK company, holds 90% of the shares, while the Angolan state-owned player Sonangol holds the remaining 10%. The overall cost of the project will be around USD 1 billion, and its construction will be divided into three main phases for a final refining capacity of 60,000 bpd. The first phase was officially approved in November 2020, with a cost of around USD 350 million, and will process 30,000 bpd. The capacity is expected to double after the completion of all phases.
Once the three phases are completed, the plant will be able to produce petrol, diesel, LPG, fuel oil and Jet A-1. It will also have a terminal with storage capacity for crude oil amounting to 1.2 million barrels and feature facilities such as a kerosene treating unit, a conventional float anchoring system, a desalinator and units for catalytic reforming, hydrotreating and catalytic cracking that will turn the facility into a full-conversion refinery.
The Cabinda Refinery is a modular refinery. Modular refineries possess several key advantages over conventional ones. They are more manageable due to their size, as well as easier to fabricate and erect. They are more flexible, as they can be disassembled and reassembled as needed. Furthermore, their maintenance costs are lower, and they can be put in service much faster than large-scale refineries, which reduces capital costs and optimises time in terms of field construction and delivery capacity.
In May, equipment for the refinery passed modular equipment tests at VFuels’ fabrication site in Houston in the presence of Angolan Minister of Mineral Resources, Petroleum and Gas Diamantino Pedro Azevedo. The next step in the project will be to ship the modular equipment to the country, whereafter the refinery will be assembled. Brazilian firm Odebrecht has been awarded a contract for EPC services and will build the plant in Malembo, close to the CABGOC-led Malongo oilfield project.
Sonangol CEO Sebastião Gaspar Martins has called the Cabinda Refinery project an important milestone for the country’s refining strategy, which aims to make the country independent from the import of refined products. “We are going to use our natural resources to produce refined products on Angolan soil, with Angolan citizens,” he said.