Egyptian Refining Company

The Egyptian Refining Company (ERC) is building a state-of-the-art US$ 3.7 billion greenfield second-stage oil refinery in the Greater Cairo Area, which will produce over 4 million tons of refined products, including over 2 million tons of EURO V diesel, the cleanest fuel of its type in the world. ERC’s production of liquid products will be sold to the Egyptian General Petroleum Corporation (EGPC) under a 25-year offtake agreement at international prices.

OPERATIONAL UPDATE

One of the largest private-sector industrial development projects in Africa, ERC is a partnership between Citadel Capital and its co-investors and EGPC, which owns approximately 25% of the project.
Despite rising demand due to Egypt’s rapid economic growth, most of Egypt’s refineries are aging and are only capable of producing heavy, lower-value products. The country must currently import diesel to bridge the gap between domestic demand and domestic production. EGPC’s Cairo Oil Refinery Company (CORC), the nation’s largest refinery with 20% of Egypt’s current refining capacity, will provide ERC with fuel oil as feedstock.

ERC will generate some US$ 200 million annually in import related savings to EGPC and fees paid by ERC to EGPC. Savings to EGPC include transportation costs of imported refined products while revenues include storage and processing fees paid by ERC to EGPC companies.

ERC will improve the environmental impact of products produced by the existing CORC units by preventing approximately 93,000 tons of sulfur from being released into the atmosphere of Greater Cairo. ERC will also invest in improvements to CORC’s environmental performance, particularly the emission of greenhouse gases.

An estimated 10,000 workers are to be employed during the construction phase of the project; 700 permanent jobs will open by the time the refinery is operational.

Regulatory and environmental approvals for the project have been obtained and ERC has signed a lump-sum turnkey contract with GS Engineering & Construction / Mitsui & Co.

In August 2010, ERC signed a US$ 2.35 billion senior financing package provided by Export Credit Agencies and Development Financial Institutions including the Japan Bank for International Cooperation (JBIC), Nippon Export and Investment Insurance (NEXI), the Export-Import Bank of Korea (KEXIM), the European Investment Bank (EIB) and the African Development Bank (AfDB). In addition, ERC signed US$ 225 million of subordinated debt with Mitsui & Co. and AfDB.

ERC expects to begin construction in 2011 and be fully operational by the end of 2015.