Malaysia Petronas to decide on Sudan refinery in ’07
June 8, 2007 (KUALA LUMPUR) — Malaysian state oil firm Petronas will make a final decision this year on whether to help build a refinery in Sudan, its chief executive said on Friday, indicating that the plant’s capacity had been increased by half.
Petroliam Nasional Berhad signed a deal in August 2005 to invest in the refinery — initially reported to be a $1 billion, 100,000 barrels per day (bpd) facility in Port Sudan — but Hassan Marican said work had yet to begin in earnest.
“It’s still preliminary, we will come to a final investment decision sometime this year,” Hassan told Reuters ahead of the Asia Oil and Gas Conference (AOGC) in Kuala Lumpur. Petronas is one of Sudan’s biggest oil producers.
“It has a 150,000 barrels per day capacity and it’s a complex refinery,” he said, adding that it would process a mix of the Nile Blend crude that Petronas helps produce as well as the country’s newer, acidic Dar Blend grade.
“It’s a combination… It’s basically Sudan crude.”
Sudan’s junior oil minister had said in India in January that they had started construction and hoped to complete the plant within two years.
Sudan recently also revamped and expanded its only existing refinery, a 100,000-bpd plant in Khartoum.
A near trebling in construction costs and fears of global refining overcapacity at the end of this decade have prompted a handful of companies to postpone or shelve plans to build new plants or expand older ones, although most are still moving ahead.
Analysts say that building a new, complex refinery now can cost $15-per-bpd output or more, a valuation that would put the Sudan plant at a cost of more than $2 billion.
Hassan declined to put a price tag on the investment. Petronas has interests in nine oilfields in Sudan and pumped 81,600 bpd of oil in the year to March 2006, about a fifth of the company’s total international oil and gas production.
“(The refinery) gives us the opportunity to upgrade the value of the Sudan crude and also access to the product market,” Hassan said.
Malaysia’s major investment in Sudanese oilfields has made the Southeast Asian country sensitive to claims by human rights groups that it does business with a regime that is a party to fighting in Darfur that has killed over 200,000 people. Sudan says only about 9,000 have died.
Western powers have urged tough U.N. sanctions against Sudan. In addition to owning shares in Malaysia’s domestic refineries, Petronas is also the majority owner of South African refiner and retailer Engen.
(Reuters)