CNPC provides $320 million supplier's credit for Khartoum Oil Refinery Construction Project

CNPC provides $320 million supplier's credit for Khartoum Oil Refinery Construction Project In July 1997, the Government of Sudan and China National Petroleum Corporation (CNPC) created a 50:50 joint venture called the Khartoum Refinery Co., Ltd. (also known as Khartoum Refinery Company Limited (KRC) or شركة مصفاة الخرطوم المحدودة) in order to construct the Khartoum Refinery.

The total cost of the project was $640 million. The Government of Sudan and CNPC were each responsible for 50% of the project cost.

In order to finance its 50% equity stake in KRC (and $320 million portion of the project cost), the Government of Sudan secured a (collateralized) supplier's credit from CNPC worth approximately $320 million. The borrowing terms of the supplier credit (loan) are unknown. However, it is known that the loan was fully repaid as of 2016.

At first, the Government of Sudan's $60 million annual debt service payments for the Khartoum Oil Refinery Construction Project were not disclosed. However, the IMF responded by conditioning its lending to the Government of Sudan upon greater transparency.

By 2002, the IMF noted in its public reporting that the Government of Sudan's 'budget now fully incorporates the debt service payments for the construction of the Khartoum refinery.' The IMF also noted that 'if debt service for [the Khartoum Oil Refinery Construction Project] is not met, the CNPC has the right to lift the equivalent of crude oil in kind: nonpayment thus is not a realistic option.' Construction began on May 26, 1998.

The Khartoum refinery was put into operation on May 16, 2000.

On August 28, 2003, Sudan's Energy Minister Awad Ahmed al-Jaz and Finance Minister al-Zubeir Ahmed al-Hassan signed a $350 million contract with China National Petroleum Corp (CNPC) to expand the capacity of the Chinese-built oil refinery in Khartoum (苏丹喀土穆炼油厂) from 58,000 barrels per day (bpd) to 100,000 bpd.

Given that the Government of Sudan held a 50% ownership stake in Khartoum Refinery Co., Ltd. at the time that the contract was signed, it was responsible for 50% of the contract cost. The first phase of the refinery expansion project was completed in 2004, and phase 2 was completed in November 2005.

The expanded refinery was put into use on June 30, 2006.

The expansion allowed the refinery to process more heavy crude oil, such as Fula from Block 6 (95 percent-owned by CNPC), which at the time was pumping at 30,000 bpd.