Belt & Road

Belt and Road 2018: Egypt oil and gas

FinanceAsia examines what China’s Belt and Road initiative has actually brought to the world last year. This is the third of our 10-part series.

China’s trillion-dollar Belt and Road Initiative is hailed as the “project of the century” as the world’s second-largest economy looks to take the lead role in globalisation historically held by the West.

Much has been discussed about the political, economic and cultural impact that the initiative could have globally since it was introduced in 2013. However, there has been little attention paid to the infrastructure projects in the making.

FinanceAsia will publish a series about the 10 biggest Belt and Road infrastructure deals that have been signed in the 2018 calendar year, and examines which companies are spearheading and likely benefitting from these projects.

The series follows a similar feature in 2017 where we examined BRI projects that started that year. Click here to revisit the feature.

These projects will be published in descending order based on their estimated project value. We will only include infrastructure deals of more than $1 billion.

        3. Oil Refining and Petrochemical Complex, Egypt

Companies involved: China State Construction Engineering, Egyptian East Gas 

Status: Contracts signed in September 2018

Estimated project value: $6.1 billion

In yet another example of China-Egypt cooperation, China State Construction Engineering signed an agreement in September to build a $6.1 billion oil refining and petrochemical complex at the newly-promoted Suez Canal Economic Zone in northeastern Egypt.

Unlike with the Tahrir Petrochemical Complex, which is expected to see minimal Chinese participation, the state-owned Chinese infrastructure builder will be the main engineering, procurement and construction contractor of the proposed complex.

The agreement is Belt and Road-driven because it was signed on the sidelines of the China-Africa Cooperation summit in Beijing, where Chinese President Xi Jinping pledged $60 billion of financial aid to the continent.

The proposed oil and petrochemical complex will be one of the key infrastructure facilities at the Suez Canal Economic Zone, a free trade zone that the Egyptian government is promoting as a new gateway between Asia, Africa and Europe.

With a designed production capacity of 8 million tons per year, the proposed facility is almost half of Egypt’s current petroleum production capacity of 16.9 million tons. It will serve as an important part of the government’s target to increase the capacity to 28.5 million by the end of 2021.

China State Construction Engineering said the contract value equates to about 3.9% of its 2017 revenue.

Apart from the petrochemical complex, the Chinese infrastructure builder also signed a $3.5 billion contract to build a residential complex in Egypt’s proposed new capital. The signing ceremony was attended by Egyptian President Abdel Fattah el-Sisi.

These projects are in line with Beijing's plan to establish an industrial hub – known as China-Egypt TEDA Suez Economic and Trade Cooperation Zone – in the free trade zone.

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