HOW NEW REFINERY CONSTRUCTION CAN HELP ANGOLA CRUDE OIL INDUSTRY

Angola is rich in crude oil but has to import the fuel it needs. A new refinery could change that.

Wearing a hard hat, safety glasses, and high-visibility vest, project manager Martin Jooste gives a tour of the rain-sodden construction site that he oversees in the tiny Angolan enclave of Cabinda.

Separated from the rest of Angola by the Democratic Republic of Congo, Cabinda produces 60% of Angola’s oil, and dozens of oil and gas platforms lie off its coast.

If all goes according to plan, by mid-2024 the construction site on the Malembo plain will be home to a new refinery that is supplied by local Cabinda oil.

Angola has crude oil, but is not processing it, Jooste told DW. “The whole idea [of the new refinery] is to make Angola less dependent on importing refined products.”

Angola, Africa’s second-biggest crude oil producer, pumps out some 1.1 million barrels of oil a day. But the southern African nation on the Atlantic coast currently has only one operational refinery, located near the capital Luanda.

The lack of refinery infrastructure means Angola spends vast sums importing fuel every year to meet its own energy needs — in 2022, the country spent $4 billion (€3.6 billion) on petroleum imports compared to $1.9 billion in 2021.

“We are still very dependent on oil products from abroad,” Angola’s Economy Minister Mario Caetano Joao told DW.

“We make a lot of money with oil on the international market when prices are high. But … we import about 70% of petroleum products. So, we have to subtract what we spend on imports from what we make selling oil,” he said.

The Cabinda refinery is a joint venture between the UK-based asset management company Gemcorp and Angola’s national oil company, Sonangol. It’s hoped that it will deliver around 10% of Angola’s domestic demand for refined oil products, such as diesel and jet fuel, with plans to increase the capacity in further phases. The project is well behind schedule though. Initial construction commenced in 2020 with the refinery initially expected to be operational by early 2022.

New refineries are also planned in Soyo, on Angola’s far north coast close to Cabinda, and Lobito, on the central coast. Both projects have seen long delays.

As the pressure to act on climate change builds though, some question the sense of such ambitious investments in fossil fuel projects.

Distilled diesel

In Cabinda, the distillation tower rises over the rest of the sandy site. The heated and vaporized crude oil is fed into the tower, allowing for its separation into products such as gases, naphtha, kerosine, diesel, and heavy fuel oil at the bottom, explains project manager Jooste.

The refinery’s first phase is costing $473 million, according to the African Export-Import Bank, and will be able to refine 30,000 barrels of oil a day. The second phase plans to double this capacity.

Cabinda enclave currently imports all its gasoline and diesel, according to Jooste, but the supply can be inconsistent.

“Sometimes people queue for fuel at the filling station. Hopefully, if they have a constant supply of diesel [from the new refinery], they don’t have to queue anymore,” he said.

In two further phases, Gemcorp also plans to refine crude into gasoline and liquified petroleum gas (LPG), known as autogas. Another $800 million is budgeted for this.

The community of Malembo borders the planned refinery. Miguel Matias Ngo represents nearly 13,000 residents, mostly fishermen, and farmers, living in the 10 villages that make up Malembo.

Sitting on a plastic chair next to his house roofed with corrugated iron, Ngo tells DW about the many oil companies that have settled in Cabinda without the community deriving any benefit.

“The biggest issue we face is unemployment,” said Ngo, wearing a polo shirt and sneakers. “The impacts of this are extremely visible today, namely youth drug abuse.” Ngo is concerned that so many have alcohol problems or smoke cannabis, and theft is also high.

The local population has hardly any prospects, while the oil companies next door are raking in big profits, he said.

Gemcorp has so far behaved differently, said Ngo. The company has launched health projects and promised to employ locals once the refinery is up and running.

Jobs for Angolans

The head of Gemcorp’s operations in Luanda, Marcus Weyll, is confident that 90% of the refinery’s jobs can be filled by Angolan workers. The first phase will create 1,300 direct and indirect jobs, according to Gemcorp, which has set up a training center for this purpose.

“Job creation, social and economic development of any country that we are based is part of our investment strategy,” Weyll told DW, adding that the refinery will also contribute to the diversification of Angola’s economy by adding value to the oil sector.

Angolan journalist and economist Carlos Rosado de Carvalho also believes that the construction of the refinery for domestic supply is a step in the right direction.

But significant investment is needed in sectors beyond oil and gas, said de Carvalho.

“It’s a question of survival because oil is coming to an end,” he told DW, adding that Angola’s known reserves won’t yield much after 2035. “The energy transition makes it even more urgent to diversify the Angolan economy because if we discover more oil in the future, it will be worth much less.”

The economic expert therefore argues that agriculture, manufacturing, and the service sector should be expanded as quickly as possible as well as the production of renewable energies.

Nearly two-thirds of Angola’s electricity is generated by hydropower and the country’s potential for solar power is enormous. Overall, however, better investment conditions are needed, de Carvalho said.

Slow energy transition

Economy Minister Joao has launched some programs to diversify the Angolan economy. But he sees these as a complement to the oil sector, not a competitor.

“Our country has been through a very destructive civil war. That’s why we have some catching up to do, and we can’t pursue an energy transition as abruptly as we would like,” he said.

The goal, he said, is for 80 to 85% of the country’s energy supply to come from renewable sources by the 2050s.

Today, the Cabinda enclave relies primarily on diesel generators to produce electricity. However, the power supply is unreliable, said community representative Ngo.

In the villages, people usually cook using charcoal made from trees logged in the local rainforest. There are renewable alternatives, stressed Ngo, such as using solar panels, but that would require financial support and training.

For now, Malembo community members hope that the refinery will bring new jobs — and that sometime soon they won’t have to line up for fuel anymore.

SOURCE: AllAfrica