The Nigerian National Petroleum Corporation and the China State Construction and Engineering Corporation Limited on Thursday signed a Memorandum of Understanding to raise $28.5bn for the construction of three new Greenfield refineries and a petrochemical complex in different locations in Nigeria.
A Greenfield refinery is one that is low in carbon emissions, almost to zero level, and complies with the new clamour for environmentally-friendly infrastructure in line with the Kyoto protocol.
The projects will be executed under a Contractor Financing and Supplier Credits scheme from the China Export and Credit Insurance Corporation and a consortium of Chinese banks.
One of the refineries will be sited in Lekki, Lagos, while another plant will be located close to the Brass Liquefied Natural Gas in Bayelsa State so that it can leverage on the feed stock that will be produced by Brass LNG and other industries that will be co-located there.
The third one will take advantage of the dredging of the River Niger at Lokoja, Kogi State.
However, the search is still on for a suitable location for the petrochemical complex along the National Gas Corridor, based on the Nigeria Gas Master Plan.
The interest of the CSCEC in the project is to expand its presence on the African continent and establish its footprint firmly on the growing Nigerian oil and gas landscape, according to the Vice-President, Overseas Operations of the company, Mr. Yu Zhende.
The Group Managing Director, NNPC, Mr. Shehu Ladan, expressed hope that the project would stem the flood of imported refined products into the country, currently estimated at $10bn annually.
He further explained that on completion, the three Greenfield refineries would have 750,000 barrels of crude oil per day refining capacity and position NNPC to engage profitably in the international trading of refined petroleum products.
Similarly, the proposed petrochemical complex will source natural gas from the Nigerian Gas Master Plan corridor to produce polymers, solvents and gas-based fertilizers to boost agricultural production.
According to the GMD, “The China State Construction and Engineering Corporation will build the plants with loans it will raise from China; 100 per cent of the loan.
“They will take 80 per cent of the share and we will take 20 per cent and all the conditions will be agreed upon.”
On differences that would exist in the management structure of the new plants from the existing refineries, Ladan stressed that the current plants were owned by the Federal Government and being operated by NNPC on behalf of the government.
He said that the Federal Government would not have shares in the proposed plants, but NNPC would into them with its own funds.
He said, ”The entire budget will be funded by loans sourced by the Chinese partners, so the terms of the loans will be spelt out and the payment period.
”And they will operate the plants together with us. It is only when we pay back the loans after some years that we can perhaps talk about taking over the interest of the construction companies.”
On the timelines for completing the plants, Ladan said plans were afoot to start the first refinery this year and complete it within five years.
He explained that raising the loan would take time, saying the funds could be available, but the terms of agreement would have to be negotiated.
The GMD further explained that with the size of Nigeria, its growing population and sophistication, it was likely that the three planned refineries might not be able to satisfy local consumption very soon.
He said, ”We should also be looking outward to export. Nigeria should be exporting refined petroleum across the West African sub-region and other countries.
“Our dream will be that one day, we will have export oriented refineries and as we locate them at various parts of the county, other state governments will also be called upon to join.
“It is not like we are closing the door of participation to other state governments.”
The GMD also highlighted the technical capability of CSCEC, noting that it was currently ranked as the sixth largest engineering and construction company in the world.http://punchng.com/Articl.aspx?theartic=Art20100514555637