Six international banks agreed with the Ministry of Petroleum last week to extend a loan facility of $1.5 billion to cover the investments needed to complete the construction and operation of the new Mazut Hydrocracking Complex in Assiut.
According to Mohamed Badr, chair and CEO of the Assiut National Oil Processing Company (ANOPC) which was established in 2018 to build and operate the complex, the loan facility consists of two tranches.
The first, worth $772 million, will be given directly to the company by the international banks, and the second will be lent to the National Bank of Egypt and Banque Misr to be later extended to the company.
The list of the international banks includes Crédit Agricole, HSBC, UniCredit Italia, BNP Paribas, Société Generale France, and the Italian state lender Cassa Depositi e Prestiti (CDP).
“For the last two years, we have been using equity to finance construction and equipment purchases, and the loan will help in pumping fresh investments into a complex which is expected to save Egypt $1.5 billion worth of fuel imports each year,” Badr said.
The overall value of investment in the complex is $2.9 billion.
It was in 2015 that the idea of the project emerged when it became clear that with the new gas discoveries being made and power stations shifting to natural gas instead of the heavy fuel oil Mazut, there was no longer any economic need for the Assiut Oil Refining Company (ASORC) to produce 2.8 million tons of Mazut a year.
“The power stations used to use Mazut in generating electricity, but with most of them opting for less carbon-intensive fuel, the government was looking for a way to increase the value-added of the ASORC output,” Badr said.
From there the idea of building a cracking complex that would change heavy and high-polluting Mazut into cleaner petroleum products emerged. The product mix of the new complex includes diesel Euro V, which is European-grade diesel that is less polluting, together with other in-demand fuel products like naphtha and liquified petroleum gas (LPG).
In addition to taking advantage of its proximity to the ASORC which provides it with the feedstock, the location of the new complex was chosen with the idea of covering the demand of Upper Egypt for petroleum products in mind.
“The production of the complex will be enough to cover most of the Upper Egyptian governorates’ demand for these products,” Badr said.
He added that together with the output of the high-octane producing unit affiliated to the ASORC, which was inaugurated in December by President Abdel-Fattah Al-Sisi, demand in Upper Egypt for diesel and fuel oil will be totally covered, allowing the saving of $1.5 billion in imports annually.
The ten governorates of Upper Egypt consume 20 per cent of Egypt’s total consumption of petroleum products, Minster of Petroleum Tarek Al-Molla said during the inauguration of the high-octane unit two months ago.
He noted that the project’s total production of 800,000 tons annually of various types of high-octane products represents 13 per cent of Egypt’s total production and covers 100 per cent of Upper Egypt’s consumption.
Developing the two complexes is part of the government’s wider plan to develop Upper Egypt, where the country’s poverty rates are highest.
Badr said that by the time it starts operations, the complex will provide 2,000 direct job opportunities to on-site engineers and workers, in addition to 9,000 indirect job opportunities to those involved in procurement, production, and distribution.
The ANOPC is owned by the National Service Projects Organisation, the Assiut Oil Refining Company, the Egyptian General Petroleum Corporation, the South Valley Petroleum Holding Company, and the Nile Petroleum Marketing Company.
In 2018, it agreed with the French company TechnipFMC to provide front-end engineering and design on the project. Two years later, in July 2020 ANOPC made another agreement with Technip under which the latter would provide engineering, procurement, and construction services at the complex.
Work on the project started in November 2020 long before the signing of the foreign-financing agreement. It is continuing with a view to completing operations and construction by the end of 2023.
*A version of this article appears in print in the 24 February, 2022 edition of Al-Ahram Weekly.
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