Egyptian Refining Co.’s $3.7 Billion Plant Will Start Up in September

Bloomberg

Egyptian Refining Co.’s new $3.7 billion processing plant will begin operations in September and save the government some $300 million a year by reducing the country’s reliance on imported fuel, its chairman said. Ahmed Heikal, who is also chairman of investment company Qalaa Holding, a 19 percent shareholder in the project, said construction of the refinery will be completed in June, with operations to begin in September. The Cairo facility will ramp up output to 98 percent of capacity by the end of 2018.

Egypt, which currently imports much of the refined products it needs for heating, transportation and power generation, is investing billions of dollars to increase capacity and reduce its dependence on international supply. The ERC refinery is part of that effort, though it has experienced repeated delays. The most populous Arab nation has struggled to revive its economy since the 2011 uprising that toppled former President Hosni Mubarak scared off foreign investors and tourists. The government floated the currency a year ago to end a crippling shortage of dollars that had made it increasingly expensive to import basic goods such as wheat and fuel.

“This is a mega-project,” Heikal said in an interview in the capital. “It’s complex, and it takes a lot of time.”

Public-Private Venture

The ERC plant, a public-private venture, had been scheduled to begin processing in the second quarter of 2018, but the start date was pushed back due to construction delays, he said. Once operational, it will reduce Egypt’s need for imported diesel by about 50 percent and for imported gasoline by some 20 percent, Heikal said.

The new plant will satisfy about 14 percent of Egypt’s annual need for liquid oil products, with capacity to produce as much as 4.2 million tons a year of liquid products as well as 600,000 tons a year of sulfur and coke. It will be able to produce 2.3 million tons of diesel, 600,000 tons of jet fuel and 522,000 tons of gasoline, in addition to butane gas and naphtha, he said.

Cairo Oil Refinery Co., Egypt’s largest processor with 20 percent of the country’s current refining capacity, will supply ERC with fuel oil as feedstock. The new refinery will also import some of the oil it needs, he said. ERC will sell its products to the state’s Egyptian General Petroleum Corp. at international prices minus 1 percent under a 25-year off-take deal, Heikal said.

Egyptian General Petroleum holds about 24 percent of ERC, with the rest owned by private companies and international financial institutions. About $2.35 billion of the total cost is financed by foreign loans to be repaid over a period of as many as 17 years from the project’s starting date, he said.