Global Processing

Mozambique Signs $8 Bln Oil Refinery Deal

April 7, 2008
According to Reuters, Mozambique''s government has approved the construction of an oil refinery in an $8 billion deal designed to reduce the energy-hungry southern African nation''s dependency on imported fuels.

The refinery in southern Maputo province will be capable of producing 350,000 barrels of refined fuel per day when it becomes operational in seven years.

The agreement with OILMOZ, the company developing the project, was signed recently.

The project will be financed through loans from foreign banks and environmental and feasibility studies will be completed within two years.

The OILMOZ development is the second oil refinery project announced by Mozambique in the past year.

The Mozambican government and U.S. firm Ayr Logistics signed a $5 billion deal last October for the construction of a refinery in Nacala-a-Velha in the northern Nampula province.

It will have an expected output capacity of 300,000 barrels per day when it starts production in 2015.

The refineries could help ease an energy crunch in Mozambique, which has enjoyed an economic boom since the end of a 17-year civil war in 1992.

The former Portuguese colony has limited energy supplies, making it reliant on foreign oil and gas. It also has faced rising petrol prices and frequent shortages at pumps, prompting fears that its economic growth could slow.

A slew of refineries have been proposed in sub-Saharan Africa but analysts say few will go ahead due to rising costs and financing difficulties.