Asian firms win Egypt refinery deal

The new plant will be ready by September 2011. (Getty Images)

Japanese trading house Mitsui has jointly won a $1.8 billion contract with South Korean construction firm GS Engineering to build a diesel oil refinery in Egypt.

The two firms are set to build the new plant for state-run oil firm Egyptian Refining Company on the outskirts of Cairo by September 2011, newswire AFP reported on Thursday.

The refinery will produce 1.5 million tonnes of diesel per year but will to have capacity to produce up to 2.5 million tonnes.

The plant "will use the residue oil produced from an existing refinery and refine it into diesel fuel for domestic consumers," said a statement from Mitsui, quoted by AFP.

The move comes in response to rising demand for cars in Egypt’s emerging economy.

"With the prevalence of private cars due to [Egypt's] economic growth, there is a serious problem of a lack of diesel fuel," the statement said.

Egypt has recently been stepping up expansion of its refineries as global interest grows in its oil and gas reserves.

Joint investments of $3 billion from Kuwait and Bahrain in June helped to push forward plans in the country for two oil refining and petrochemical projects.

The two projects - with capacities of 100,000 barrels per day (bpd) and 150,000 bpd - will be located in Suez, a city 130 kilometres east of Cairo and sitting on the southern tip of the Suez Canal.

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