Egypt Gets Financing for Refining Project

Egypt will be seeing a refining upgrade as the government has secured $3.7 billion in project financing for a facility. The project was developed by local private equity house Citadel Capital and the international arm of state-run Qatar Petroleum will be joining in on the project.

This new refining unit, for the Egyptian Refinery Co. (ERC), will take light products and fuel oil from EGPC's Cairo Oil Refinery Co. (CORC) and turn them into valuable light products such as diesel, fuel oil, jet fuel, and naphtha. These products will then be sold back to EGPC under a take-or-pay contract with the product prices based on international norms.

“ERC is more than one of Africa’s largest-ever project finance deals, it is also a transformative development for the Egyptian economy. The financial close of ERC confirms to international investors and the global community that Egypt is open for business. The signal this sends is huge,” said Citadel Capital Founder and Chairman Ahmed Heikal, adding, “ERC is a key component of Egypt’s energy security going forward.”

 Shareholders include state oil company EGPC, Citadel Capital, Qatar Petroleum International, Saudi Arabia's Al Rajhi, the World Bank's IFC, Germany's DEG, and Holland's FMO.

$2.35 billion of the project financing package comes from international backers and was put into place in August 2010. The rest of the funds will come from the shareholders.

A $1.9 billion construction contract was awarded to South Korean construction company GS and Japan's Mitsui.