The Government does not supply crude oil at prices lower than those of the international market to the refineries being implemented in the Angolan petrochemical industry, nor does it not stop exporting “a single barrel of oil” for these units, declared the president of the Executive Committee of the Angolan refinery. Luanda.
“It is a false problem to think that the Government of Angola is obliged to supply raw materials for refineries at a low price”, said Joaquim Kiteculo, quoted yesterday by the Ngol programme, broadcast by Sonangol on Channel A of Rádio Nacional de Angola.
The prevailing decision for the refining units being implemented in the light of the Master Plan for the Petroleum Derivatives Logistics Chain, adopted by the public capital company to achieve the country’s self-sufficiency in energy, is that the raw material for refineries is provided by any supplier that is able to supply.
Refining operators are, within the framework of this plan, compelled to make their purchases at the international market price, from the operators where they find the best cost/benefit ratio, with the imposition of subsidies for the purchase of crude being ruled out.
“Today, for the Luanda Refinery”, Joaquim Kiteculo pointed out, referring to the first refining process completed by Sonangol as part of the Master Plan, “crude oil is no longer subsidised. The previous decree was canceled and the crude that we process today at the Luanda Refinery is purchased based on oil prices on the international market”.
Despite these being the decisions that rule over acquisitions, the chairman of the Executive Committee pointed out the flexibility of the model, which takes into account the advantages of a deal in which, during the negotiation, each party tries to maximize gains.
The Cabinda Refinery investor, said to illustrate the options adopted, he will buy wherever and in the country where he has the best offer for him: if he has to buy in Angola, he will have to talk to the holders of crude production quotas, the operators in the production sector, depending on the type of product you need and will negotiate directly with the owner of the crude oil that has to be supplied to the refinery.
But, he noted, “the fact that the Cabinda Refinery is practically being implemented on a neighboring land to the Malongo Production Field, means that transport costs from the supplier to the final customer are low, because there is a distance of no more 400 meters: this is an advantage, but apart from these advantages, inherent to the business assumptions, there are no subsidies for that part of the project. This applies to other projects”.
Soyo’s will buy raw material where the investor will receive the best advantages: it can purchase from ANPG, Sonangol Pesquisa e Produção, from Somoil or from any other operator in the country, but within the prices practiced in the international market.
At the Lobito Refinery, regardless of whether it belongs to the state-owned Sonangol, the raw material will be delivered at actual cost, not least because other entities are expected to enter as shareholders, and it should be concluded that “the Angolan Government is not trying to provide that will harm it, as it is not part of the assumptions for the implementation of these projects”.
“Any of the initiatives that we are talking about here, Cabinda Refinery, Soyo Refinery, Lobito Refinery and, consequently, the expansion of the Luanda Refinery, is based on these assumptions”, he indicated.
Angola is gathering capacity to process 425,000 barrels per day
The total processing capacity of refining companies, after the implementation of the Master Plan for the Oil Derivatives Logistics Chain, is 425,000 barrels per day, according to figures from the president of the Executive Committee of the Luanda Refinery.
Two hundred and twenty-five thousand barrels per day are used in the processing of oil derivatives for internal consumption, with the other 200 thousand destined for export to the southern African region, where countries such as Zambia, Democratic Republic of Congo, Botswana, Tanzania and Namibia which, in an initial technical feasibility study, were seen as the major destinations to be served.
However, said Joaquim Kiteculo, this market has expanded because, from 2020, South Africa has begun to dismantle the first four refineries in a process to deactivate six and the country to start importing oil products.
“This opened up an opportunity for us (Angola) to also be able to place derivative products in South Africa, which is a large consumer market”, said Joaquim Kiteculo.
The official highlighted the fact that, in the Southern African Development Community (SADC), almost no country does not have fuel subsidies, with the price to be paid for petroleum products being the real market price which is determined by demand and supply, which “will bring a great breath of air in the profitability” of Angolan projects in the refining sector.
The construction of the refineries obeys very specific assumptions, recalled Joaquim Kiteculo, pointing to factors such as viability, which goes through the practice of the market price in the countries where the product from the Angolan refineries will be placed.
This implies that any of the refineries will have to acquire the raw material on the international market so that there are no doubts, something that is already underway at the Luanda Refinery, where crude oil is no longer subsidized.
