Floating oil refinery will put Djibouti on E. Africa energy map

Djibouti is set to construct a floating oil refinery that will position the country as an international bunkering point for ships and a leader in the refined oil market for the East African region.

The project, with a capacity of 6 million metric tons, will be established in the recently opened Damerjog Industrial Park. It will allow Djibouti to transition to lower-sulfur marine fuels, in line with the International Maritime Organization’s most recent environmental regulations.

This will help limit the environmental impact of the country’s industrial activities and ensure sustainable development not only for Djibouti but also the wider region.

So far, three agreements have been signed between Djibouti Damerjog Industrial Park, Singapore High Quality Energy Pte Ltd, Great Horn Investment Holding and Khor Ambado FZCO to finance and develop the project.

Aboubaker Omar, chairman of Djibouti Ports and Free Zones Authority, a government body that administers and manages the Port of Djibouti and several other facilities in the country, said the international partners are completing the financial and business models for the project, after which construction will begin.

Omar said construction on the floating refinery — costing around $1 billion — is expected to begin in the first quarter of 2020.

He said the major foreign investment is a testament to Djibouti’s growing attractiveness as an international investment destination, adding that the floating oil processing plant would “drive forward the country’s industrialization and investment in human capital”.

“We anticipate the new project will have positive effects that will extend beyond our borders, aiding the increased transportation of refined oil to our neighbors,” he said.

The refinery is the first major development in the Damerjog Industrial Park, which is itself viewed as a driver of the country’s industrialization.

Established in 2017, the industrial park is on track to host the country’s only heavy industrial and petrochemical base.

It will consolidate the country’s position as a node on the global trade map, as it will be the only industrial complex in East Africa equipped with a “road-port-air-railway” infrastructure network.

Investors and businesses in the new park will benefit from the advanced logistics and transport advantages, while driving forward the country’s vision of becoming a global trade and logistics hub, its backers say.

In addition to hosting the floating refinery, the park will also include a multipurpose port, storage tanks, and dry dock.

Omar said the full range of facilities in the industrial park will be built over the coming years.

“The park is the latest step in the government’s development strategy, which aims to add value to Djibouti’s strategic location at the crossroads between Africa, Asia and Europe,” Omar said.

Djibouti’s efforts in infrastructure development — including with a free-trade zone — has attracted praise from other African countries, which have been sending information-gathering delegations.

On Jan 22, a delegation from South Sudan, led by Foreign Minister Awyd Achuil, visited the Damerjog park.

Achuil said the free-trade zone in Djibouti offers a model that other African countries can learn from.

“Africa doesn’t have to reinvent the wheel when there are already projects that are promoting economic growth and improvement in the livelihood of the citizens,” she said. During the visit, the two countries signed an agreement that will see Djibouti use South Sudan raw oil for the floating refinery project.