Egypt has signed a memorandum of understanding with two Chinese companies to develop a new $2bn refinery at an undisclosed location in the country.

The country’s Petroleum & Mineral Resources Ministry signed the memorandum with private developer Rongsheng Holding Group and state energy firm China National Petroleum Corporation (CNPC) on 2 May, it said in a statement.

Under the terms of the agreement, Rongsheng and CNPC would build and operate the refinery, which will have an initial capacity of 15 million tonnes a year (t/y) with a further 15 t/y expansion planned for the future.

The Chinese firms will operate the refinery for 25 years before handing it over to the Egyptian government. The refinery will produce a variety of petroleum and gasoline products including liquefied petroleum gas, diesel, motor gasoline, jet fuels, and the petrochemical feedstock naphtha.

China has a number of new refinery projects planned, but has found it difficult to raise the necessary financing for them.