Africa’s Newest Oil Refinery Fires Up to Supply Fuel for Angola

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(Bloomberg) — Angola’s Cabinda oil refinery, among the first to be built in Africa in decades, has started shipping fuel, helping the crude producer bolster domestic supply and reduce reliance on imports.

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The plant, built at a cost of more than $470 million, is supplying diesel to the domestic market, and shipping heavy fuel oil and petrochemical ingredient naphtha to international buyers, according to executives at Gemcorp Capital LLP, an investment firm that owns 90% of the refinery.

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A roaring flame from the flare tower could be seen on a tour of the plant in Cabinda province, Angola’s oil-rich exclave. Its output is well timed as the war in Iran has disrupted fuel supply, led to a surge in prices across Africa and is accelerating a push in the continent to expand refining capacity. 

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“The very core of the investment thesis for this refinery was energy security for Angola,” Atanas Bostandjiev, Gemcorp’s founder and CEO, said in an interview at the site. “Fast forward this to what we’re seeing geopolitically — with the crisis in the Middle East — that whole thesis now got validated.”

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The London-based investment company took over the project from another developer about six years ago and plans to double its 30,000 barrel-a-day capacity in a second phase that will cost an estimated $700 million. 

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While relatively small, the Cabinda refinery is the first to be built since Angola’s independence in 1975 and will produce enough fuel to meet a tenth of local demand. That’s set to grow when capacity doubles to 60,000 barrels per day, with Gemcorp targeting financial close this year for the expansion.

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Africa exports three quarters of its crude production and imports 70% of refined fuel including gasoline, diesel and kerosene, Farid Ghezali, secretary general of the African Petroleum Producers’ Organization, said at a conference in Cape Town last month. 

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That costs the continent $50 billion annually in lost value, he said, calling for a plan to transform Africa into “a giant refinery.”

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Angola’s state-owned Sonangol, which operates the nation’s only other refinery in the capital, Luanda, plans two others in Lobito and Soyo.

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While billionaire Aliko Dangote’s 650,000 barrel-a-day refinery in Nigeria reached full capacity weeks before the start of the war, Africa is littered with plants that have closed.

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Gemcorp is planning a third phase at the Cabinda refinery, and is also considering building a petrochemicals plant there.

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