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Chinese banks and insurers sign a 23 billon dollar refinery deal in Nigeria

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Nigeria and a Chinese state firm have signed a 23-billion-dollar deal to build three refineries and a petrochemical complex in Nigeria, a world’s major oil exporter, an official statement said Friday.

The Nigerian National Petroleum Corporation (NNPC) and China State Construction Engineering Corporation Limited (CSCEC) sealed the deal Thursday. The two will jointly seek the financing and credits from the China Export & Credit Insurance Corporation and a consortium of Chinese banks for the projects.

“NNPC aims to accelerate the construction of new refineries in Nigeria to stem the flood of imported refined products into the country, currently estimated at 10 billion dollars,” an NNPC statement said. At the same time, CSCEC wants to “expand its presence on the African continent and establish its footprint firmly in the Nigerian oil and gas landscape,” the statement said.

The refineries are expected to add some 750,000 barrels per day capacity in Nigeria and position NNPC in the international trading of refined petroleum products, it said. Nigeria’s four refineries — with a total capacity of 445,000 barrels per day — are performing less than 30 percent of their installed capacity, according to official figures. Corruption and a lack of proper maintenance of the refineries are often cited as reasons for their underperformance.

Nigeria, Africa’s leading oil producer, has for more than a decade been importing refined petroleum products from abroad to meet local demands. The construction of the new refineries “will reinforce the ongoing oil and gas reforms in Nigeria”, as envisaged in the Petroleum Industry Bill (PIB), which has been before the Nigerian parliament for almost a year and imminent deregulation of the downstream sector the country’s oil industry, the NNPC statement said.

The country’s new president, Goodluck Jonathan, has promised to pursue the government’s policy to reform the oil sector to make it profitable. His nascent administration recently sacked some key officials in the oil industry and redeployed some others as part of the promised reform.

Abuja, May 14, 2010 (AFP)