New Oil Refinery Economically Unsustainable - Specialist

Luanda - The construction of a new refinery in Angola in the current conditions of the market would not be advantageous to the country, taking into account its high cost of construction, exploration and maintenance.

This was said by the economist Lago de Carvalho in a feature article published in the edition of October 23, 2015 of the economics weekly “Expansão”.

In his article, the specialist argues that the survival and maintenance of such a crude oil processing plant would be fully dependent on State subsidy, alike the Luanda refinery.

According to the economist, the investments being made in the diversification of the economy must be profit-making, that is, must pay their operation costs and permit the recovery of the invested capital with interest.

In view of some indicators, Lago de Carvalho estimates that the construction of a refinery in Angola would cost, at the minimum, three times the cost in Europe and United States of America, and its maintenance would involve even higher costs.

He said in a technically evolved market, a refinery operates with a minimum of operative personnel, with all maintenance work done by specialised companies and needs a fixed staff of 50 people.

To the Angolan reality, according to the specialist, such a refinery would have some hundreds of workers as it would need technical staff, many of whom expatriate.

The choice, according to Lago de Carvalho, would be selling the oil to a company in exchange for refined products, or paying a refinery abroad to refine the Angolan oil, repatriate the products that the country needs and sell the surplus in the world market.

He also considered the purchase of a refinery abroad, explaining that many refineries abroad are owned by companies from diverse countries.


The specialist mentioned that some refineries in Europe with a higher capacity than the one proposed to Angola were traded at about two billion dollars.