Zambia and Angola Ink $2.5 Billion Oil Deal

Angola oil
Angola is now Africa's 2nd largest exporter of crude

The Zambia Development Agency (ZDA) and an international corporation of Angola yesterday signed a US$2.5 billion memorandum of understanding (MoU) which will see the construction of a petroleum pipeline to run from Lobito in Angola to Lusaka.

The corporation, Basali Ba Liseli Resources Limited (BBLR) and ZDA, confirmed that the project that would see a reduction in the pump prices of petroleum products, would commence early next year and be completed in 2016.

According to the MoU, the project would apart from helping to reduce fuel prices in Zambia, also create about 6, 000 jobs in both countries.

The project would be called Angola-Zambia Refined Petroleum Multi-Product (AZOP) would cover 1, 400kilometres from the Port City of Lobito, to Lusaka in Zambia. AZOP Pipeline system would not involve middlemen but designed to deliver finished products including petrol, low sulphur diesel, Jet fuel and Liquefied Petroleum Gas (LPG) for Zambia, and Katanga Province in Congo DR.

Speaking in Lusaka during the signing ceremony, BBLR executive director Wamulume Kalabo said the AZOP Pipeline would be conducted through a Build Operate and Own, Transfer (BOOT) basis under the Public-Private Partnership (PPP) initiatives.

He said BBLR was currently evaluating bids received from shortlisted first-class pipeline design and engineering companies who responded to requests for proposals and a technical committee would be appointed by end of this month.

Mr Kalabo said the project would provide logistical efficiencies in the delivery of petroleum, ready for end user consumption by drastically reducing on middlemen and other logistical requirements through directly connecting the Government buying agencies in Zambia and other agencies to the producer.

“We have no doubt the AZOP Pipeline system will reduce the relative pump pricing in Zambia and the regional target market, while further enhancing the quality of life by agitating for migration from the use of charcoal to the use of LPG, in most domestic homes,” he said.

He said BBLR would work with competent authorities in Angola and Zambia with the core objective of constructing a refined petroleum multi-product pipeline to produce a minimum of 200,000 barrels per day of which Zambia would be benefitting 80,000 barrels per day.

He said in that regard, BBLR was in advanced negotiations with the Development Bank of Southern Africa (DBSA) with a view of anchoring the financing for the AZOP project.

He said BBLR had received letters of expressions of interest from various financing institutions, potential technical partners and equity partners that would provide resources with BBLR on AZOP. And Ministry of Commerce Trade and Industry Permanent Secretary Stephen Mwansa said the Government would fully support the project to materialise and create jobs for citizens.

Mr Mwansa said the Government was working towards creating a robust economy and the coming of AZOP would help improve the economy through provision of easily accessed petroleum in the nation.

He said energy was an important sector as it was a lifeline to driving the national economy and that the Government was confident the project would be completed as planned.

ZDA acting director Glyne Michelo said the project was in tandem with ZDA’s mandate of fostering economic development and growth which was to promote and facilitate investments.

He said Zambia had a high degree of investment security because of unparalleled political stability that was strife-free without ethnic divisions and a democratic rule that respected diversity of constitutionality.

Mr Michelo said the obligation of ZDA in facilitating BBLR/AZOP would among other goals provide relevant information necessary to enable it to determine and evaluate feasibility of the project.