Sonangol, Angola's state-owned oil company, signed an agreement in Beijing earlier this year with China National Chemical Engineering to build the Lobito Refinery, a new petroleum refining facility that will significantly increase Angola's crude oil production capacity and deepen the country's transition to energy self-sufficiency.
Once completed, the Lobito Refinery will produce up to 200,000 barrels of refined crude oil per day. This is enough to satisfy Angola's domestic energy needs, according to officials, and will allow the country to produce a greater quantity of high-demand fuels for export, including gasoline, diesel, liquefied petroleum gas, and jet fuel A1.
Sonangol will hold a 30% stake in the facility, with the remaining equity to be held by private and foreign investors. The country of Zambia, which will be directly connected to the pipeline, will own a 15% share in the refinery.
Under the terms of the MoU between Sonangol and CNCEC, both parties will be required to raise the requisite financing for the project. While a construction contract has yet to be awarded, it remains possible if not probable that the Chinese engineering company could be awarded the opportunity to develop the facility.
Chinese investment comes as Sonangol, which is tasked with stewardship over Angola's vast subsurface energy resources, has embarked on a capital project investment spree unmatched in Angolan corporate history.
Sonangol is currently developing a refinery in the northern Angolan city of Soyo capable of producing up to 100,000 barrels of crude per day. With a price tag of $4 billion, the Soyo project is expected to become the largest-ever investment in Angola. The deal's lead partner is a subsidiary of American oil company Chevron. At the same time, Sonangol is constructing another refinery in Cabinda that officials say will be equipped to refine some 60,000 barrels every day.
The impetus behind this building spree is two-fold.
One the one hand, Angola has increasingly sought to become energy self-sufficient, particularly in the face of volatility in the global energy market that has roiled domestic economies and contributed to inflation in the United States and the European Union. Sonangol's upgraded capacity, officials said, will allow Angola to better establish itself as sub-Saharan Africa's energy hub and improve its ability to satiate its own energy needs and meet those of countries across the African continent.
At the same time, Sonangol has sought private investment for the first time in its nearly half-century existence. State-owned enterprises can often suffer from inefficiencies, growing sclerotic over time. To keep Sonangol dynamic as the global energy market continues to evolve, Angolan officials have sought to inject private investment into its corporate structure. The Angolan state aims to divest itself of 30% of Sonangol's total equity by 2026.
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