By Tom Burgis in Lagos
Published: May 15 2010 03:00 | Last updated: May 15 2010 03:00
China has agreed to spend up to $23bn (€19bn, £16bn) to build oil refineries and other petroleum infrastructure in Nigeria, potentially strengthening its hand in the country as it seeks to secure 6bn barrels of crude reserves.
Emmanuel Egbogah, special adviser to the president of Nigeria on petroleum matters, told the Financial Times that China State Construction Engineering Corporation signed the memorandum of understanding on Thursday.
In spite of being Africa's leading energy producer, Nigeria imports almost all its fuel - and pays a subsidy equivalent to its entire annual capital spending - because existing refineries are in disrepair.
"It is a starting point but it's a serious proposal," Mr Egbogah, a key player in the negotiations with Chinese companies, said.
The refineries would have a combined capacity of 750,000 barrels a day, well in excess of what Mr Egbogah forecast would be domestic demand of some 450,000 b/d by the time they are finished in a scheduled five years.
That would allow for export and might see the government make good on a long-held pledge to deregulate the downstream sector, where the subsidy paid to fuel importers keeps pump prices low, deters investment in refineries and drained $4bn from government coffers last year.
The refineries would be constructed in Lagos, the commercial capital, Kebbi state in the remote northeast, and Bayelsa, the home state of Goodluck Jonathan, the newly appointed president, at the heart of the restive Niger delta oil province. The location of a petro-chemical plant has not been decided.
Mr Egbogah said that as a result of the agreement, the Chinese construction group will raise finance from Export-Import Bank of China and other state-backed lenders that have underwritten infrastructure ventures across Africa.
It could also strengthen China's hand in separate negotiations by Cnooc, one of China's three big energy groups, to secure one-sixth of Nigeria's 36bn barrels of oil reserves. Mr Egbogah said that there had been little movement on that front since October but that the Chinese groups had mentioned building refineries as part of its initial proposals.
China has struck infrastructure-for-resources bargains across Africa over the past decade as it seeks crude, minerals and metals to fuel its breakneck economic expansion.
But previous Chinese offers to build or renovate Nigerian refineries as part of haggling over oil blocks between 2005 and 2007 have run aground. Beijing's emissaries have had far less success navigating Nigeria's perilous political terrain than they have in Angola or Sudan, both of which have emerged as crude suppliers to China.
The new accord might represent a breakthrough, however.
Coupled with its chronic lack of electricity, Nigeria's dependence on imported fuel is seen as one of the most obstinate impediments to Africa's most populous nation realising its full economic potential.
Source: http://www.ft.com/cms/s/0/098d91c8-5fba-11df-a670-00144feab49a.html
Published: May 15 2010 03:00 | Last updated: May 15 2010 03:00
China has agreed to spend up to $23bn (€19bn, £16bn) to build oil refineries and other petroleum infrastructure in Nigeria, potentially strengthening its hand in the country as it seeks to secure 6bn barrels of crude reserves.
Emmanuel Egbogah, special adviser to the president of Nigeria on petroleum matters, told the Financial Times that China State Construction Engineering Corporation signed the memorandum of understanding on Thursday.
In spite of being Africa's leading energy producer, Nigeria imports almost all its fuel - and pays a subsidy equivalent to its entire annual capital spending - because existing refineries are in disrepair.
"It is a starting point but it's a serious proposal," Mr Egbogah, a key player in the negotiations with Chinese companies, said.
The refineries would have a combined capacity of 750,000 barrels a day, well in excess of what Mr Egbogah forecast would be domestic demand of some 450,000 b/d by the time they are finished in a scheduled five years.
That would allow for export and might see the government make good on a long-held pledge to deregulate the downstream sector, where the subsidy paid to fuel importers keeps pump prices low, deters investment in refineries and drained $4bn from government coffers last year.
The refineries would be constructed in Lagos, the commercial capital, Kebbi state in the remote northeast, and Bayelsa, the home state of Goodluck Jonathan, the newly appointed president, at the heart of the restive Niger delta oil province. The location of a petro-chemical plant has not been decided.
Mr Egbogah said that as a result of the agreement, the Chinese construction group will raise finance from Export-Import Bank of China and other state-backed lenders that have underwritten infrastructure ventures across Africa.
It could also strengthen China's hand in separate negotiations by Cnooc, one of China's three big energy groups, to secure one-sixth of Nigeria's 36bn barrels of oil reserves. Mr Egbogah said that there had been little movement on that front since October but that the Chinese groups had mentioned building refineries as part of its initial proposals.
China has struck infrastructure-for-resources bargains across Africa over the past decade as it seeks crude, minerals and metals to fuel its breakneck economic expansion.
But previous Chinese offers to build or renovate Nigerian refineries as part of haggling over oil blocks between 2005 and 2007 have run aground. Beijing's emissaries have had far less success navigating Nigeria's perilous political terrain than they have in Angola or Sudan, both of which have emerged as crude suppliers to China.
The new accord might represent a breakthrough, however.
Coupled with its chronic lack of electricity, Nigeria's dependence on imported fuel is seen as one of the most obstinate impediments to Africa's most populous nation realising its full economic potential.
Source: http://www.ft.com/cms/s/0/098d91c8-5fba-11df-a670-00144feab49a.html
Comments
Post a Comment