The scheme to build the estimated $1,000 million grassroots export refinery at Ain el-Sokhna near Suez is set to enter the next phase with the formation of a project company expected by the beginning of Ramadan in early October. The establishment of the project company will pave the way for several other agreements relating to feedstock and debt financing to be finalised in the last quarter (MEED 20:5:05).
State-owned Egyptian General Petroleum Corporation (EGPC), which will take an equity stake in the project, has recently issued a letter of commitment to provide about 70,000 barrels a day (b/d) of heavy crude and other feedstock from the nearby El-Nasr oil refinery to the new facility. The Royal Dutch/Shell Group has also signed a letter of intent (LoI) with the project promoter and developer, the local Investment & Securities Group (ISG), to provide another 40,000 b/d. Italy's Eniis expected to sign an agreement to supply about 20,000 b/d of feedstock for the refinery once the project company is established. The new fluid catalytic cracking (FCC) refinery will have total capacity of 130,000 b/d. On the financing side, BNP Paribas and Commercial International Bank (CIB)have been selected as financial advisers for the project's debt portion, which will make up about 70 per cent of the total cost. A formal appointment will be made once the project company has been set up. Financial close is targeted for mid-2006. The project management consultancy (PMC) and engineering, procurement and construction (EPC) contracts will also be tendered following the establishment of the project company. In addition to ISG and EGPC, shareholders in the new project company will be made up of a group of local and regional investors, including from Saudi Arabia and Kuwait. The final shareholder structure has still to be finalised. The new refinery will process low-quality heavy crude to provide gasoline, ultra-low sulphur diesel and propylene among other fuels, the bulk of which will be exported to Europe and the US. Under a recent LoI, Shell has agreed to offtake most of the output (MEED 28:11:03).
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