South African company to build $6b oil refinery in Ghana

A South African company, New Alpha Refinery Ghana Ltd., has won a multi-billion dollar contract to build an oil refinery in Ghana. The refinery, when it is completed will be the largest in West Africa.

According to a Reuters report quoting an official, the company has signed a memorandum of understanding with the government of Ghana to construct the new $6 billion oil refinery in the capital, Accra.

Executive chairperson Merlyn Julie told Reuters the refinery would initially produce 200,000 barrels per day (bpd), with first production expected by 2015.

“We have signed a memorandum of understanding … We expect the first fuel to be produced in 2014 or 2015,” Julie said on the sidelines of an African energy conference, according to the report.

He added that the capacity of the refinery, to be situated on 1000 acres of land in central Accra, could be expanded to 400,000 bpd.

Julie said the costs, initially pegged at $7.6 billion, were now projected at some $6 billion and that was because, globally the economic slowdown and weaker oil prices have eased pressure on the cost of construction materials.

“It will be the largest refinery in west Africa… We are looking at being the gateway for West Africa,” Julie said.

Julie told the Reuters that the company has not decided on partners who will fund the project yet, but they are in discussions with local banks and businesses in that direction.

Ghana has one refinery, the Tema Oil Refinery, located in the main port city of Tema.

Ghana has attracted lots of interest from the interational oil and gas sector despite the global economic crisis, since oil was discovered in commercial quantities on the country in June 2007.

Texas-based Kosmos Energy with partners Tullow Oil of the UK, and Anadarko with the state-owned oil and gas company, Ghana National Petroleum Corporation, (GNPC) are the major players in the oil industry in Ghana – controlling the largest oil field to be discovered in West Africa in the last 10 to 15 years, the Jubilee oil field. It is estimated to hold nearly 1.8 billion barrels of oil according to Tullow Oil and has 17 wells.

By Emmanuel K. Dogbevi