Case study: The Egyptian Refining Company project in Cairo
Egypt has made advances in fuel quality over the past decade by introducing unleaded gasoline, but like many countries in Africa still supplies diesel with very high sulfur content, up to 10,000 ppm or higher. Starting in 2017, Egypt will be improving the quality of its fuel mix and reducing imports of refined diesel with the Egyptian Refining Company (ERC) project in Cairo. The ERC refinery will be a major expansion and upgrade of the existing, decades-old Cairo Oil Refinery Company (CORC). The ERC will process CORC’s main output, low value fuel oil, into Euro V diesel (10 ppm sulfur), greatly improving both the quality of the fuel and its economic value.
While the ERC project has been developed in close cooperation with the Egyptian Government, the initial impetus for the project came from the private sector. Egypt does not currently have sulfur limits in diesel and gasoline, and desulfurization was actually not the primary driver of the project; the main goal of the project is financial return by greatly increasing the value of the refinery outputs. The project’s developers took several measures to improve the environmental footprint of the refinery in order to facilitate financing with international institutions such as the European Investment Bank, and the decision to produce Euro V fuel was made partly for this reason.
At a total expected cost of $3.7 billion (USD), ERC’s refinery is financed by a number of international investors and development banks, including the private bank Citadel Capital, the World bank IFC, several national and regional development banks, oil companies, and several other private banks and other investors. This financing package took years to establish through the global recession and survived the turmoil of the Egyptian revolution in 2011 and continuing political crisis. The ERC project is a remarkable example of how refinery upgrades to produce cleaner fuel can make economic sense at a national level by producing more valuable products and alleviating import dependence. The introduction of ultra-low sulfur fuel at this refinery could potentially enable the Egyptian government to begin mandating a diesel fuel quality standard for Cairo, paving the way for a later nation-wide standard.