China signs deal to build refineries, petchem complex in Nigeria

19 May 2010 11:36  [Source: ICIS news]

SHANGHAI (ICIS news)--China’s largest contractor China State Construction Engineering Corp (CSCEC) will build three refineries and one petrochemical complex in Nigeria under a $23.8bn (€19.5bn) deal with Nigerian National Petroleum Corp (NNPC), it said on Wednesday.

The two companies signed a memorandum of understanding (MOU) on 13 May for the financing and construction of the projects, CSCEC said in a disclosure to the Shanghai Stock Exchange.

The projects would add some 750,000 barrels per day capacity in Nigeria and position NNPC to engage profitably in the international trading of refined petroleum products, the Nigerian state-owned company said in a separate statement.

According to the UK’s BBC media organisation, the three refineries would be built in Nigeria’s Bayelsa, Kogi and Lagos states, while the location of the planned petrochemical complex has yet to be confirmed.

“NNPC aims to accelerate the construction of new refineries in Nigeria to stem the flood of imported refined products into the country, currently estimated at $10bn annually,” NNPC said.

CSCEC would do the engineering, procurement and construction (EPC) work on the plants, said a source at the Chinese engineering firm.

“It is a framework agreement. The specific contract value will be fixed after further negotiations depending on the technology and equipment used in the projects,” the source added.

CSCEC would help seek financing for the Nigerian projects from China Export & Credit Insurance Corp, SINOSURE and a consortium of Chinese banks, NNPC said.

Meanwhile, the proposed petrochemical complex would source natural gas from the Nigerian Gas Master Plan to produce polymers, solvents and particularly, gas-based fertilizers that are required to boost Nigeria’s agricultural production, NNPC said.

“The new refineries will reinforce the ongoing oil and gas reforms in Nigeria,” NNPC said, indicating that Nigeria’s petroleum industry bill would soon be passed into law, with deregulation at its downstream sector not far behind.

($1 = €0.82)

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By: Judith Wang
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