FMC Teams with Afghans to Build 60,000-Barrel-Per-Day Refinery

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--FMC Technologies Incorporated's (NYSE:FTI) (Houston, Texas) FMC Oil and Gas Corporation is planning to invest $700 million in a joint venture with an Afghan company to build an oil refinery in northern Afghanistan. The 60,000-barrel-per-day-refinery will be constructed in the Jawzjan province.

Wafiulah Iftekhar, the head of the Afghan Investment Support Agency, said that the refinery project would be completed by 2015 and that it would start immediately.

"The oil refinery would make Afghanistan a self-sufficient country," he said. "Refining the oil inside the country would make fuel available for local customers at a much lower price."

The project, which has Afghan and U.S. shareholders, is expected to provide direct employment opportunities for 14,000 people and indirect work opportunities for a further 20,000 people.

The refinery will be fed with oil from the Amu River resource, which has an estimated reserve of 87 million barrels. China's National Petroleum Corporation (CNPC) has signed a 25-year contract with the Afghan government covering drilling for oil in the country's northern area, which will be the first major Afghan oil production. FMC and CNCP have signed a three-year oil supply contract.

An initial 150,000 barrels per day is expected to come from the CNPC wells, which will be increase to 300,000 barrels per day in the next phase. The Chinese company has made a major investment of hundreds of millions of dollars in the oil project and will pay 15% royalty on oil, 20% corporate tax and give 50 to 70% of profit from the project to the Afghan government, which will benefit to the tune of $7 billion over the next 25 years.

This project is one of many that are under consideration in Afghanistan, which is rich in resources with deposits of copper, oil, gold, iron ore, and critical industrial metals like lithium. As international support winds down, the country looks to these projects to make it financially independent.

FMC Technologies is a leading global provider of technology solutions for the energy industry. The company has about 16,800 employees and has operated 30 production facilities in 16 countries.

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