ONGC eyes Angola refinery project

Oil PSU bids for $3.75-billion Sonaref project.

Oil and Natural Gas Corporation has bid to participate in Angola's $3.75-billion Sonaref project for building a 10 million tonne refinery at Lobito.

Sonaref project involved setting up a grassroot refinery of 200,000 barrels per day (10 million tonnes a year) capacity at Lobito on the Atlantic coast and was linked with equity participation in the exploration of deepwater blocks 15, 17 and 18, industry sources said.

ONGC plans to participate in the Sonaref project through its subsidiaries ONGC Videsh Ltd for upstream exploration and Mangalore Refinery and Petrochemicals Ltd for the refinery project.

Sources said the company had in July held talks with Sonangol in London to finalise partners for the project and firm up structure of the partnership. Sonangol had also invited Hydro, Exxon, Sinopec, Chevron, Energem, Petrosa and the existing group of partners in the blocks 15, 17 and 18 for the talks.

OVL recently received a communication (from Sonangol) seeking details on updating market studies for the refinery. It was preparing the queries in association with MRPL, sources said.

Angola's government-owned Sonangol will hold up to 40 per cent interest and is looking for partners to keep a minimum of 20 per cent stake. The project is estimated to cost $3.75 billion and is expected to be completed by 2009-10.

The refinery will come on stream in 2009-10 and approximately half of the production is destined for domestic consumption and the remaining 50 per cent will be for export.

The bid comes despite Sonangol blocking OVL's successful bid for acquiring Shell's 50 per cent equity in the block 18. OVL and Shell had reached agreement on the block, but the deal could not go through as Sonangol exercised its pre-emption right to block the sale.

OVL also plans to bid for exploration blocks in ultra deepwater and deepwater in the Congo and Kwanza basins that are likely to be offered towards the end of 2005 or early next year.