Egypt's provisional government pushes for Mostorod financial closure

26 May 2011

Refinery to stimulate foreign investment and address fuel shortage

Egypt’s provisional government has sent the Petroleum Ministry a letter instructing it to push forward with the financial closure for the Mostorod refinery.

The $3.8bn project has been delayed by the political developments that ended President Hosni Mubarak’s 30-year rule in February, as the $2.6bn financing deal with a syndicate of private banks and export credit agencies was not fully concluded.

The letter is likely to quicken the process. Sources close to the deal believe the government wants financing to be in place before Ramadan in August and elections in September.

The refinery, which will be constructed near an existing complex at Mostorod to the north of Cairo, is the largest of its kind on the African continent (MEED 22:4:11).

Moving forward with the project would stimulate foreign investment at a time when the Egyptian economy is still reeling from the political upheaval and create goodwill among the population by addressing the country’s fuel shortage.

The refinery will have a new hydrocracker to produce clean-burning diesel and will have a processing capacity of 100,000 barrels a day (b/d).

The project is majority owned by private equity firm Citadel, with a 15 per cent stake owned by state-run Egyptian General Petroleum Corporation (EGPC).

The EPC contract has been awarded to Japan’s Mitsui and South Korea’s GS Engineering & Construction. They will begin work as soon as financing is in place.

Preliminary construction work is progressing as planned at the site, with the political turmoil having little impact on Mostorod’s progress. EGPC is reportedly on target to hand over the site to the EPC contractor ahead of schedule.

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