Flush with petroleum, Angola is one of the world’s largest oil producers yet still starved for energy.
The problem is that the country lacks sufficient refining capacity, forcing it, like other African oil-exporting countries, to import most of its petroleum products.
But in a move aimed at boosting crude oil refinery in Angola, the construction of Lobito Refinery which has been on the cards for a number of years will allow Angola to sufficiently meet its refined petroleum products demand including liquefied petroleum gas, gasoline, diesel and jet fuel. The project will be the second after the only operational refinery, the Luanda Refinery, which is operated by Sonangol and energy company Fina Petroleos de Angola.
Sonangol, Angola’s national oil company (NOC) signed an MoU with the China National Chemical Engineering (CNCEC) to raise funds for the Lobito Refinery project.
The agreement signed in Beijing could also potentially lead to the CNCEC constructing the refinery which is expected to come online by early 2026.
Sonangol Chairman Gaspar Martins signed the MoU on behalf of NOC on June 6 witnessed by the Minister of Mineral Resources, Oil and Gas Diamantino Azevedo. Also present was the National Oil and Gas Agency of Angola President Paulino Jerónimo.
Zambia’s Stake in the Lobito Refinery Project
Once complete, the Lobito Refinery will produce up to 200,000 barrels of refined crude per day (bpd), making it one of the most important infrastructure projects in the country’s energy sector.
Angola also targets to export refined petroleum products to its neighbors with Zambia being the first to formalize its expression of interest in the Lobito Refinery project and signing a cooperation deal last year.
Zambia relies heavily on petroleum imports and its Minister of Energy, Peter Chibwe Kapala, stated that the move on the Lobito project is part of his country’s efforts to improve energy relations with its neighbors in the Southern African Development Community (SADC). With a 15% stake in the project, Zambia will be connected to the Lobito Refinery via a dedicated oil and gas pipeline.
The Sonangol-CNCEC deal for the new refinery will help Angola ramp up the refining of crude oil since refined oil is below domestic demand. The Lobito refinery is under the Angola government’s plans to construct national refineries which will help reduce the country’s dependence on imported refined petroleum.
Angola is building two more refineries including the facility in Soyo with a production capacity of up to 100,000 bpd. The other project is in Cabinda and will produce 60,000 bpd when completed. With this new infrastructure, Angola is establishing itself as a regional energy hub exporting fuel to the SADC.
WHY IS THIS IMPORTANT?
Angola imports 80% of refined petroleum products and only 20% of them are sourced locally. The country is Sub-Saharan Africa’s second-largest oil-producing country after Nigeria.
With Angola’s oil industry dominated by the upstream sector in exploration and production of offshore crude oil and natural gas, the country is now targeting downstream investments to meet local demand as well as demand in neighboring countries like Zambia.
Sonangol holds a 30% stake in the Lobito Refinery project with the remaining 70% in private ownership meaning there is still room for more investors.
- The Oil & Gas Journal: Angola inks preliminary deal for construction of Lobito refinery by Robert Brelsford
- Energy, Capital & Power: Zambia, Angola Sign Cooperation Deal for Lobito Refinery Project