Niger cuts oil price for Chinese Joint-venture refinery

Niger has agreed a 15 percent cut in the price of oil sold by China National Petroleum Corp (CNPC) to their struggling joint-venture SORAZ refinery in the southern region of Zinder, a union official said.

Niger became one of Africa’s newest crude producers when it began pumping oil in 2011 as part of a $5 billion production-sharing deal with CNPC to develop the Agadem block in the southeast. The agreement also saw creation of the refinery, 60 percent owned by CNPC and 40 percent by Niger.

The contract, at the insistence of Niger, fixed the price of crude bought by the refinery from CNPC at $67 per barrel even though CNPC wanted the cost aligned with global market prices.

A slump in global oil prices, combined with high running costs, has since left the refinery struggling.

“CNPC now sells a barrel at $57 to Soraz following an agreement by all the parties,” Boukar Elemi, a union spokesman, said.

The refinery has a capacity of about 20,000 barrels per day, has faced financial difficulties and several shutdowns. About 7,000 barrels a day of its production is destined for the local market.

“In total, the refinery owes CNPC about $144 million,” Elemi said, adding that the refinery was getting close to a shutdown.