Egypt and China to join refinery forces

The Egyptian Ministry of Petroleum signed an agreement with China to build a new $2 billion refinery, which will have its affect on the oil industry in Egypt. “Signing this agreement with China to build a refinery could not pick a better time. We are now on the right track, especially that our current refineries lack the technologies that being used in other countries,” an official in the petroleum sector told Egypt Oil & Gas newspaper (EOG).

He added that the nine refineries operating in Egypt now are mostly producing Mazut and Solar, but the new refinery, to operate with the two stages system, will provide up to 30 million tones of petroleum products and decrease the country’s imports from other countries, which would decrease the bill of importing products at high prices from the foreign partner.

According to the terms of agreement, the refinery will be operated under the B.O.T system through which Egypt will fully own the refinery after a 25-year period. “Most of the developing countries operate with the B.O.T system in order to avoid the high cost of initiating private refineries with modern technologies that need major investments,” answered the source when asked about his opinion concerning this ownership condition.

“Our production is rising, however it is not parallel to the continuous increase of local demand. That is why the ministry is always busy trying to satisfy the citizens’ needs,” he commented when asked about the main goal of founding such refinery with China. He also said that it would bring more foreign investments to the country, and that would support the movement of exploration too.

Eng. Sameh Famhy, the Egyptian Minister of Petroleum said that Egypt would hold 10% share at the beginning of this project that will be paid from the revenues attained during operation phase. Then, after 20 years, a 41% ownership share will be transferred to Egypt, while the remaining 49% share will be gradually given to the Egyptian side during the last five years of the agreement.

Fahmy assured that the 25-year period is too short compared to other petroleum projects, such as the refinery of Al-Nasr Petroleum Co. at the Suez governorate, which has been held for 100 years, and still operating effectively and partially supplying the needs of local market thanks to the regular maintenance of equipments.

“The new Egyptian-Chinese refinery will be constructed at the Al-Nasr Petroleum Co. properties in order to utilize the existing facilities, which reflects the trust in the capabilities of this 100-year refinery,” said Fahmy.


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