Refining investments in Africa
Investment in African refining is constantly increasing and two new projects have recently been announced. Essar Group will invest US$ 400 million in upgrading its Kenyan refinery and ONGC Videsh are planning to construct a greenfield refinery in Nigeria.
Essar’s Kenyan investment
The Mombassa refinery is Kenya’s only refinery and is jointly owned by Essar Group and Kenya Petroleum Refineries. The US$ 400 million investment will build a captive power plant at the refinery to help stop power supply disruptions. This will then hopefully mean the plant can run at its full capacity of 3.7 million tpy rather than its current processing output of 1.6 million tpy.
Essar’s investment further allows the company to access to the African oil market, which is furthered by its Gujarat coastal refinery in India.
ONGC Videsh’s Nigerian investment
ONGC Videsh, the state owned overseas investment division of Indian company Oil and Natural Gas Corporation, will invest in the construction of a new Greenfield refinery in Nigeria as the Nigerian government endeavors to encourage the activity of Indian oil and gas companies in the country. The new facility will process approximately 180 000 bpd and will be a joint venture with Lakshmi Mittal operating under the company ONGC-Mittal Energy.
The investment is part of an exploration, production and downstream deal that is currently being arranged. Indian companies will be awarded Nigerian oil blocks in return for their investment in Nigeria’s downstream hydrocarbon processing industry.
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