July 2, 2008

Oil refinery planned for south

If all goes according to plan, by the middle of the next decade there could be two oil refineries operating in Mozambique, one at Nacala in the north of the country, and one in the district of Matutuine, in the far south of the country. The southern refinery is a project of Oilmoz, a company founded by former foreign minister Leonardo Simao. Oilmoz signed a Memorandum of Understanding with the world's largest services company, PriceWaterhouse Coopers (PWC), under which PWC will undertake feasibility studies for the project. Other areas covered in the memorandum are the identification of strategic partners, consideration of tax, legal, insurance and regulatory requirements, risk management, marketing the project to "key stakeholders", and finance modeling.
Oilmoz says that the total capacity of the refinery would be 350,000 barrels a day, and it would cost about eight billion US dollars to build. The Oilmoz Chief Executive Officer, Fausto Cruz, said that the funding would come from a consortium of banks, and that negotiations with the banks were now being finalized. He could not name the banks involved until the deal is complete. According to him, around 95 per cent of the production from the refinery would be exported, mostly to other members of SADC (Southern African Development Community).
Currently SADC imports about 506,000 barrels of refined fuels a day, and by 2014, the year Oilmoz expects the refinery to start operating, the figure will have risen to over 600,000 barrels a day. Cruz said that Oilmoz was also developing contacts with other companies that had relevant experience in running refineries.
Matutuine is an environmentally sensitive area, noted for its biodiversity, and its pristine beaches. A press release from Oilmoz promises that "the erection of the refinery and the petrochemical processing plant would be undertaken in accordance with the latest environmental, industrial and engineering standards applicable in Mozambique, the European Union and North America". The release adds that "strict environmental standards will be imposed in regard to the use of resources, air, noise and soil pollution, and the discharge and disposal of waste products, in liquid, gas and solid forms".
Also part of the package is a 500 megawatt gas-fired power station. This additional electricity will be a welcome spin-off from the project, given southern Africa's current critical shortage of power. The lack of electricity has put several major industrial projects on hold, including a third phase of the MOZAL aluminium smelter on the outskirts of Maputo.
Oilmoz expects that 15,000 jobs will be created during the construction phase, and a further 2,000 direct, permanent jobs once the refinery is operational. The company is working with the Joaquim Chissano Foundation (of which Simao is executive director) to design a package of social projects to assist the communities living in the refinery area. The foundation will also take responsibility for all of Oilmoz's training projects.
The refinery planned for Nacala has as its main shareholder the US company Ayr Logistics. Known as the Ayr-Petro-Nacala project, its capacity will be somewhat smaller than that of the Oilmoz refinery, with a projected production of 300,000 barrels a day. (Agencia de Informacao de Mocambique, Maputo)

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