China Eximbank contributes to $70 million loan for Phase 1 of the Sentuo Oil Refinery Project (Linked to Record ID#105745)

Project narrative

The Sentuo Oil Refinery Project, which is being undertaken in two phases, involves the construction, commissioning, and operation of a 5 million metric ton per annum (MTPA) -- i.e. 100,000 barrels per day (BPD) -- oil refinery in Tema. The products from the refinery will include LPG, gasoline, diesel, kerosene, fuel oil, and asphalt. Phase 1 involves the construction of a medium-scale oil refinery with a throughput capacity of 2MTPA (40,000 BPD purchased from the Middle East, Nigeria and Venezuela). Phase 2 will involve the construction of an oil refinery with a throughput capacity of 3MTPA (60,000 BPD purchased from the Middle East and Nigeria). The total estimated cost of Phase 1 (excluding working capital expenses) was $753,850,000. Phase 1 was to be financed according to a debt-to-equity ratio of 9:91 (a $683,850 equity contribution and a $70 million loan). The loan to Sentuo Oil Refinery Limited (森拓石油化工有限公司) — a special purpose vehicle and wholly owned subsidiary of Sentuo Group Limited, a private joint-stock enterprise that is jointly established by professionals engaged in innovative chemical technology development and industrial application, petrochemical project construction, energy, and petrochemical trade — for Phase 1 was expected to be repaid within 5 years of the commissioning of the oil refinery (estimated final maturity date: January 26, 2029) and repayment was expected to start six months after construction (estimated first repayment date: July 1, 2021). The total estimated cost of Phase 2 (excluding working capital expenses) was $862,110,000. Phase 2 was to be financed according to a debt-to-equity ratio of 13:87 (a $762,110,000 equity contribution and a $100 million loan). In July 2023, China Eximbank and China Construction Bank agreed to issue a Sinosured-backed loan to Sentuo Oil Refinery Limited for Phase 2. China Shandong International Economic & Technical Cooperation Group Ltd (CSI) (山东国际加纳公司) was the contractor responsible for Phase 1 implementation. Phase 1 construction activities began in January 2021. The oil refinery commenced Phase 1 operations on August 29, 2023. Then, on January 26, 2024, Ghanaian President Nana Addo Dankwa Akufo-Addo attended a Phase 1 completion ceremony. The project was originally scheduled to commence construction in December 2020 and reach completion by June 2023. While oil refineries are known for their output of air pollutants and water contamination as pointed out by BFT Online in February 2024, Sentuo's website shows an awareness of their negative impacts on the environment. It describes working in an 'environmentally sound manner' and striving to be one of the 'top five lowest greenhouse gas (GHG) emitters in the oil and gas industry'. In June 2020, an environmental impact assessment was prepared by Sentuo Oil Refinery Limited as required by law. The assessment noted steps would be taken to mitigate negative environmental and social impacts as part of the establishment of the refinery including negative impacts on the wetland surroundings, and the nearby Chema Lagoon. Despite this, the Ghanian Environmental Protection Agency refused to grant a permit for the construction, citing the location's wetland status and futher burden to the already environmentally challenged Chema Lagoon. Nonetheless, construction went ahead, with support from the Tema Development Corporation.