Nigerian greenfield refinery project funding at risk

Delays in the signing of a Definitive Agreement for the Nigerian Greenfield Refinery project have put the future of the project at risk.  The China State Construction Engineering Corp. (CSCEC) signed a Memorandum of Understanding (MoU) with the Nigerian National Petroleum Corp. (NNPC) last year for the construction of three greenfield refineries and a petrochemical plant in Nigeria.  The MoU was to expire on May 11, 2011. To date, none of the required feasibility studies for the construction of the plant have been undertaken.  According to the CSCEC, the funds for the project may no longer be available.  Zhang Yang, marketing manager for overseas operations, stated, “The company has been advised that unless a Definitive Agreement for the three greenfield refineries and the petrochemical plant is executed before the MoU lapsed today there is no certainty that the funds to finance all of the refineries and the petrochemical plant will still be available.”  The project is expected to cost US$28.5 billion, 80% of which was to be funded by the China Export Credit Insurance Corp. (SINOSURE) and a consortium of Chinese banks. The NNPC had requested that the MoU be extended by one year.  The greenfield refinery project would boost the country’s refining capacity by 750,000 barrels per day. (May 13, 2011)