Cooperation Proposal of

Djibouti Damerjog Refining Project

DJIBOUTI

Content
01 Background of the project

02 Introduction of Damerjog Industrial Zone

03 Introduction of Damerjog Refining Project

04 Cooperation concept
DJIBOUTI 1. Background - Traditional friendship of Djibouti and SaudiArabia

• Djibouti, with a population of 875,000 people and the size of only 23,000 square kilometers, is located at a strategic point, linking the Red Sea to the Gulf of
Aden. Djibouti is an increasingly vital economic and energy hub– a path through which 10% of the world’s oil exports and 20% of commercial exports pass
annually.

• The strategic cooperation between the two countries started with the visit of President Ismail Omer Guelleh in Saudi Arabia. On October 15, 2015, King Salman
and President Ismail Omer Guelleh held talks in Riyadh on bilateral relations and on the developments in the region. President Guelleh presented King Salman of
Saudi Arabia with the Djibouti Grand Star, Djibouti's highest award, in recognition of the king's efforts in the service of issues of Islamic and Arab nations.

• Two memorandums of understanding (MoUs) and a bilateral agreement were signed on the sidelines of a Saudi-Djibouti businessmen forum in Djibouti on April
21, 2017. The MoUs were signed to rehabilitate King Fahd Road in Djibouti.

• On April 26, 2017, Saudi Arabia and Djibouti signed a cooperation agreement in the military field, aiming at enhancing military cooperation between the two
states, was co-signed by Deputy Crown Prince Mohammed bin Salman bin Abdulaziz, Second Deputy Premier and Minister of Defense, and his Djiboutian
counterpart Ali Hasan Bahdon.
DJIBOUTI 1. Background - The national strategy of Djibouti: "developing economy and improving
people' s liveling"

1.The economic situation in

Djibouti

2.The status of employment in

Djibouti

3.The necessity of the national

strategy: "developing economy
and improving people' s
livelihood"
DJIBOUTI 1. Background – Supporting Infrastructures

Since 2013, Chinese investors such as China Merchants Group has worked with the Djibouti government to develop infrastructures
such as ports, logistics, railways, highways, banks, bonded areas, free trade zones and industrial parks, which have greatly improved the
economic performance of Djibouti and objectively provided a solid supporting security for the construction and operation of refineries.
Djibouti will eventually become the regional hub for shipping, logistics and industries. And become an Important Strategic pivot
for China's “ One Belt One Road “ Strategy.

Damerjog
Industrial
Silk Road
zone
International
Free Trade Bank
Zone
Old Port
Regeneration
DMP
Railway
DJIBOUTI 1. Background – Supporting Infrastructures

• The N1 Road connects Djibouti with the northern border

city of Galafi, the length is about 215 kilometers. The
North Line
north Line: Take about 90% of the traffic.

South Line

• The Djibouti-Ethopia railway has officially opened, it

will greatly enhance the logistics and transport capacity
and efficiency between the two countries.
DJIBOUTI 1. Background – Master Plan

Regional master planning mode:

3 Zones: Grand Free Trade Zone, CBD
and financial zone, Damerjog heavy
industrial zone + Djibouti International
CBD
Container (DICT), project supporting
DICT and
and the coord i na ted d ev el o p men t ,
promote the achievement of national
financia
economic development strategy.
l zone
Grand Free
Trade Zone

Damerjog Heavy
Industrial Zone
（30KM2）
The straight line distance from Damerjog Heavy
Industries Zone to the port of Djibouti is about 10 km,
and 1 km to the Somaliland border. The N2 road
crosses the block and stretches to the border with
Somalia.
DJIBOUTI 1. Background – Master Plan
Regional development mode: "Electric power, desalination" as the core services supporting the development of the formation of cement,
chemical, steel, oil refining and other industrial clusters, to form a closed-loop industrial chain, and quickly promote the establishment of regional
industries and regions economic development.
Product
Salt Exhibition
Chemical Center
Bonded
Industry logistics
Djibouti Free Trade
Zone DICT
Light
(Mainly light industry) real
Industrial
estate 自贸区
Industrial
Park
food
首发区（6.35平方公
processing
里）

N1
Steel
Oil refining industry
Chemical
industry industry
infrastructure

Port
Damerjog Industrial Zone
(Mainly heavy industry) Power
Cement
industry Plant
Slag utilization, power supply Shipyard

public facilities
DJIBOUTI 1. Background - The strategic deployment and preparation for refining project

The establishment of Damerjog Industrial Zone, special preferential policies for refining projects, including tax relief, lower land rent, etc ;
 The construction of oil terminals, power plant and desalination plant in the industrial zone and 300,000 cubic meters of oil storage tanks, provide complete
facilities for oil refining projects;
Invest jointly with chinese petrochemical enterprises in the construction of refinery projects, built world-class refinery plant, the joint management and co-
operation of China and Djibouti parts;
Fully open the refined oil market of Djibouti for the oil refinery project, explore the neighboring markets such as Ethiopia, omaliland, Somalia, Kenya and South
Sudan and expand its market capacity.
DJIBOUTI 2. Introduction of Damerjog Industrial Zone

Damerjog Industrial Zone：

• The total industrial zone is about 30.96 square
kilometers, of which land area is 9.9 square
80,000 tons
kilometers, the sea area is 21.06 square kilometers.
Oil dedicated
terminal
The industry clusters such as power, desalination,
oil refining, building materials, shipyard,
warehousing and logistics are planned. among
them: Shipyard

• Power plants and desalination plant covers an area 300 000 m2

commercial
of 29ha; tank project

• 300 000 m2 commercial tank project covers an area

of 40ha; LNG Refinery Reserved
project land for
refinery
• 2.5 million tons / year oil refinery project covers an
Building
area of 90ha, and another 84ha reserved land for materials park
International
the project. community

Power plant and

desalination plant
DJIBOUTI 2. Introduction of Damerjog Industrial Zone - oil-specific terminals

Damerjog 80,000 tons oil-specific terminals:

• On the basis of the existing Damerjog Livestock Wharf, extend 1.1km of the approach bridge to the depth area of -14.0m and build a special oil terminal of 80,000t.
• The total length of the terminal is 475m, with one 10 000 - 80 000 tons berth on the outer edge and two 10 000 - 30 000 tons berths on the inside. The length of the pier bridge is 2.3km.
• The wharf intends to adopt gravity caissons structure, the designed annual capacity is 4 million tons.

Future expansion plans:

In the future, reclamation of 8.24km2 will be carried out on both
sides of the oil-dedicated quay bridge to upgrade the oil-dedicated
wharf to a multi-purpose wharf.
After the upgrade, the main terminal will contain ten 10 000 -
100 000 tons multifunctional berths (which can be docked in
combination with 100,000 tons). The total length of the coastline will
be 3460m.
DJIBOUTI 2. Introduction of Damerjog Industrial Zone - Power plant and desalination plant

Damerjog Power plant：

The scale of the power plant is 600MW, which provides power for various industrial projects in the zone. The power plant will be
constructed in three phases. The first phase is 120MW. After the second phase of the project, the power generation will reach to 300MW. After
the third phase of the project, the power generation scale will reach to 600MW. among them:

The first phase of construction, planning and construction of a 2 × 60MW coal-fired power station, the fuel is from South Africa and
Mozambique coal. Power station ash will be the raw materials of the cement plant.
Up to now, the feasibility study report of power plant project has
been completed, the PPA negotiation and financing negotiation are
under way.
Damerjog Desalination plant:
The scale of the desalination plant is 4 million tons / year,
providing industrial fresh water for various industrial projects in the
zone. Production capacity : 500 tons of fresh water / hour.
DJIBOUTI 2. Introduction of Damerjog Industrial Zone - Commercial Storage Tanks Project:

Damerjog Commercial Storage Tanks Project:

Commercial storage tanks have a storage capacity of 300,000 cubic meters. Including: 10 diesel storage tanks (10 floating roof storage tanks
within 20,000 cubic meters), 8 gasoline storage tanks (6 floating roof storage tanks within 10,000 square meters , 2 floating roof tanks within
5,000 cubic meters ), 6 Air coal storage tanks (6 floating roof storage tanks within 5,000 cubic meters), oil loading facilities for commodity oil
(including 22 oil loading trucks);

Turnover of refined oil 3 million tons / year.

DJIBOUTI 2. Introduction of Damerjog Industrial Zone - Refinery project

Oil refining project of 2.5 million tons / year:

• The refinery will take Saudi Arabia crude oil, Oman crude oil and other Middle East as the main raw
material, processing capacity of raw materials is 50,000 BPD, the main products are gasoline, diesel,
aviation kerosene, 380 # marine fuel oil, LPG and otherproducts.
• Among them, the quality indexes of gasoline and diesel oil will reach the current AFRI-3 standard in
Africa, taking into consideration the future upgrade requirements of AFRI-4 standard, the Jet A1
standard for jet fuel products, the RMG380 requirement for ship combustion products, and flexible
adjustment according to market needs .
• Products such as gasoline, diesel, aviation kerosene and LPG produced by the refinery are for Djibouti
and other East African markets; 380 # Marine fuel oil is sold to the Chinese market except for refueling
local berthing vessels.
• The oil refinery will use Damerjog oil terminal docks to unload crude oil, oil pipelines into the refinery
crude oil storage tank; refinery products, LPG, 380 # marine fuel oil into the refinery oil storage tank,
gasoline, diesel, aviation kerosene into 300,000 m3 commercial storagetank.
• For the tranport of the refinery products, we not only consider the way the car outsourcing, but also
consider the way of ship, at the same time the necessary prerequisites of the railway loading will be
reserved.
• The refinery project can rely on the power plant and desalination plant built in the industrial area to solve
the supply problems of industrial electricity, industrial fresh water and industrialsteam.
DJIBOUTI 2. Introduction of Damerjog Industrial Zone - Prospects for the economy

Through the support of large industries and the economic development of the surrounding industries, the following effects on
the overall economy of Djibouti are expected to result:

Now 2020 2025 2030

Economic •GDP reach to 1.735 billion USD • GDP reach to 3 billion USD • GDP reach to 6 billion USD, •GDP reach to 10 billion USD,
•GDP per capita is 1886 USD • GDP per capita reach to 3000 USD • GDP per capita reach to 6400 USD •GDP per capita reach to 10000 USD
development goals: •Attract 647 million USD of foreign • Attract 1.2 billion USD of foreign direct •Attract 2 billion USD of foreign direct •Attract 3 billion USD of foreign direct
direct investment. investment investment. investment.

Industrial • Introduct and develop the • Optimize the industrial structure and layout, realize the modernization of industrial
manufacturing industries in the first three and economic systems, and complete the construction of large-scale industrial
development goals: years, industrial output shall increase by ecosystems in the region.
300 million US dollars

Social • Provide 5000-8000 jobs •Provide 10000-15000 jobs •Provide 15000-20000 jobs
• Cultivate 2,000 elite national political •Cultivate 5,000 elite national political •Cultivate 8,000 elite national political
development Goals: and economic management talents and economic management talents and economic management talents
DJIBOUTI 3. Introduction of Damerjog Refining Project - Target market analysis of refined oil
products

Refined Oil Demand in Target Region（104t/a）

Country Diesel Kerosene Gasoline LPG Total
Ethiopia 221.76 84.00 144.00 0.78 450.54
Somalia 36.00 18.00 6.00 60.00
Djibouti 16.00 12.00 0.80 0.065 28.87
Total 273.76 114.00 150.80 0.845 539.41

 Besides, Kenya, South Sudan and Eritrea are potential target markets where we would like to complete.

 Ethiopia
In 2017 the Ethiopian oil consumption is expected to about 73000 barrels / day. In recent years, Ethiopia sustained rapid economic
growth, the average annual growth rate reached 10.6%. The shore oil dock in Djibouti and reach Ethiopia by truck .
 Somalia
At present, there is no oil refining facility in Somalia, and the consumption of refined oil is about 6000 barrels per day .
 Eritrea
The consumption of refined oil is about 4700 barrels per day.
 Kenya
The demand for refined oil in 2016 was about 360000 barrels per day. A large amount of oil resources were found in the Turkana region
of Northwest Kenya in 2012 . It is expected that from the second quarter of 2017, the region's crude oil production will reach 2000 barrels /
day, and gradually reach 10000 barrels / day production, the entire oil reserves are expected to reach 750 million barrels .
DJIBOUTI 3. Introduction of Damerjog Refining Project - nature of the crude oil

Feedstock: Middle East Crude-Saudi Arabia Medium

Middle East Units Crude Naphtha Kero Diesel AR
Initial Cut Point deg C n/a 15. 160. 220 360.
End Cut Point deg C n/a 160. 220. 360. 999.
Wt. Yield WT% 100.00 12.59 7.75 21.66 56.45
Cum. Wt. Yield WT% 100.00 14.14 21.90 43.55 100.00
API Gravity API 28.60 69.17 48.25 34.85 12.17
Density @20deg C kg/l 0.879 0.7003 0.7830 0.8467 0.9809
Sulfur WT% 2.807 0.014 0.166 1.419 4.404
Acidity (TAN) mgKOH/g 0.21 0.0 0.05 0.17 0.30
Nitrogen (Total) ppm 1515.6 0.0 0.0 21.2 2678.5
Flash Point calc(HSI/API) deg C 50 98 156
Freeze Point deg C -92 -61 -2 92
Smoke Point mm 25.00 17.12 3.38
Cetane Index (D976) 44 49.3
Viscosity @ (100℃) cSt 3.8 0.4 0.6 1.4 90.2
Conradson Carbon WT% 8.29 0.00 0.00 0.00 14.73
Vanadium ppm 44.55 0.00 0.00 0.00 79.25
Nickel ppm 17.85 0.00 0.00 0.00 31.80
DJIBOUTI 3. Introduction of Damerjog Refining Project - Gasoline quality standards
Typical gasoline standards
Sulfur Olefins Aromatics Benzene Oxygen RVP Density Effective
Region Name RON
ppm V% V% V% % kPa,max t/m3 time
GB-V 10 24 40 1.0 2.7 95/92 45-65 0.72-0.775 Active

Chinese GB-VIA 10 18 35 0.8 2.7 95/92 45-65 0.72-0.775 2019

GB-VIB 10 15 35 0.8 2.7 95/92 45-65 0.72-0.775 2023
Europe EN228-2012 10 18 35 1.0 3.7/2.7 95 45-60 0.72-0.775 Active
AFRI-3 300 n/a n/a 5.0 n/a 91 n/a n/a Active

Africa AFRI-4 150 n/a n/a 1.0 n/a 91 n/a n/a 2020
AFRI-5 50 n/a 42 1.0 n/a 91 65 0.75-0.78 2030
Djibouti 10 n/a n/a n/a n/a 91 69 0.705-0.75 Active
DJIBOUTI 3. Introduction of Damerjog Refining Project - Diesel, aviation kerosene quality standards
Typical diesel standards
Flash Point
Sulfu FAME PAH Cetan Cetane Densit Effectiv
Region Name （close cap）
r v% wt% e Numbe y e
℃
ppm Index r t/m3 time
GB-V 10 60 1.0 11 46 51 0.81-0.85 Active
Chinese
GB-VI 10 60 1.0 7.0 46 51 0.81-0.845 2019

Europe EN590-2013 10 55 7.0 8.0 46 51 0.82-0.845 Active

AFRI-3 500 n/a 7.0 n/a 45 n/a 0.80-0.89 Active

Africa AFRI-4 50 n/a 7.0 n/a 45 n/a 0.82-0.88 2020

AFRI-5 50 n/a 7.0 11 46 49 0.82-0.88 2030

Djibouti 500 66 n/a n/a 48 n/a 0.83-0.87 Active

Typical kerosene standard-Jet A

Characteristics Limit

Aromatics，vol%，max 25

Sulfur，mass%，max 0.30

Density 15℃，kg/m3 775-840

Freeze Point，℃ -47

Smoke Point，mm 25
DJIBOUTI 3. Introduction of Damerjog Refining Project - Marine fuel oil quality standards

MARPOL-Residue Marine Fuels (RMG)

Characteristic Unit Limit 180 380 500 700 Test methodreference
Kinematic viscossity at 50℃ mm 2 /s max 180.0 380.0 500.0 700.0 ISO 3104
Density at 15℃ Kg/m 3 max 991.0 S e e 7.1 、ISO3675 or ISO12185
CCAI -- max 870 S e e 6.3 a)
Sulfur mass% max Statutory requirements S e e 7.2 、ISO8754 、 ISO14596
Flash Piont ℃ max 60.0 S e e 7.3 、ISO2719
Hydrogen sulfid mg/Kg max 2.0 S e e 7.11 、IP570
Acid number mg KOH/g max 2.5 ASTM D664
Total sediment aged mass% max 0.1 S e e 7.5、ISO10307-2
Carbon residue : micro method mass% max 18.0 ISO10370
winter quality ℃ max 30 ISO3016
Pour piont (upper)
Summer quality ℃ max 30 ISO3016
Water volume% max 0.5 ISO3733
Ash mass% max 0.1 ISO6245
Vanadium mg/Kg max 350 S e e 7.7 、IP501、IP470 or
ISO14597
DJIBOUTI 3. Introduction of Damerjog Refining Project - processing flow and the main economic
and technical indicators of the refinery
Overall Process-Fuel type
Glossary
LPG LPG
CDU：Crude Distillation Unit
LPG
Light Naphtha Gasoline VBU：Visbreaker Unit
Straight-run Naphtha NHT
KHT：Kerosene Hydrotreating Unit
Heavy Naphtha CRU Platformate
DHT：Diesel Hydrotreating Unit
CDU
Straight-run Kerosene KHT Kerosene Kerosene NHT：Naphtha Hydrotreating Unit

CRU：Catalytic Reforming Unit

 The crude processing capacity of the refinery

HT Naphtha
is 2.5 million tons / year, equivalent to 50,000
Straight-run Diesel DHT BPD.
HT Diesel Diesel
AR

Sulfur
Recovery Sulfur
VBU VB Naphtha Unit

Marine
Marine Fuel RMG 380
* Sketch Process Map with Main Streams Only Fuel
DJIBOUTI 3. Introduction of Damerjog Refining Project - SWOT analysis, capacity forecast of the
refinery project

Main technical and economic indicators:

Unit Quantity
Feed
Crude Oil 10 4 t/a 250.00
Product
LPG 10 4 t/a 4.75
Gasoline 10 4 t/a 27.47
Kerosene 10 4 t/a 19.29
Diesel 10 4 t/a 53.55
Marine Fuel 10 4 t/a 137.45
Sulfur 10 4 t/a 2.20
Fuel
Fuel Gas 10 4 t/a 2.38
Fuel Oil 10 4 t/a 2.76
Economic Indicators
Total Investment M$ 538.3
FIRR % 18.91

 Development Plan of Damerjog Refining Project:

After the project is completed and put into production five years later, depending on the operation level of the refinery
and the development of the refined oil market, the refinery expansion and reconstruction project will be launched in time to
expand the original 2.5 million tons / year scale of the refinery to 5 million tons / year. At the same time extend the
petrochemical industry chain, building a joint aromatic chemical plant, ethylene chemical plant.
DJIBOUTI
 Strength:
The traditional friendship between Saudi Arabia and
Djibouti and their political alliance;
The strength of Chinese partners and petrochemical industry
can not only provide sufficient construction funds and working
capital for Damerjog refinery projects, but also promote Damerjog
refinery products and semi-finished products to enter the Chinese
market by virtue of their great influence in the Chinese market.
Good location in Djibouti
The Djibouti government's strong support for the Damerjog
refinery project not only includes the refinery project as a national
priority, but also promises to fully liberalize the domestic refined
oil market to the refinery project and actively expand Ethiopia,
Somalia, etc. by utilizing its own regional influence Neighboring
countries market.
 Weakness:
Djibouti is lack of local refining infrastructure, lack of
industry-related experience;
Lack of reserve of professional and technical personnel in
the refining industry and lack of skilled industrial workers;
Lack of industrial support capacity;
Damerjog oil refining project operating costs are high;
 Opportunities:
Djibouti as the regional shipping center for East Africa;
The friendly support of the Middle East friendly countries;
Djibouti government will petrochemical industry as a national
key development areas;
Djibouti and neighboring Ethiopia have witnessed rapid growth
in the refined oil consumer market with annual growth rates
approaching 11%. It is estimated that in the next 5-10 years, the total
consumption of refined oil products in the region is expected to
exceed 10 million tons / year. For Damerjog Refinery further
expansion of production provides a broad market prospects.
SWOT
 Theat:
Damerjog oil refining project can obtain sustainable, stable
and cheap crude oil resources or not;
International crude oil market, a substantial price
fluctuations;
DJIBOUTI 3. Cooperation concept

It is suggested that Saudi Aramco, the government of Djibouti and China Merchants Group jointly develop the Damerjog
refinery project and establish a strategic partnership between the three parties to promote the implementation of this concept. The
initial concept of project cooperation is as follows:

In the first ten years, ARAMCO provides crude oil assistance to the Djibouti
government at a scale of 50,000 barrels / day
• Acquire 20% shares of the project company. Damerjog Refining Project is expected to reach 200,000 bbl / day of processing
and sales after full preparation of regional markets such as Djibouti, South Sudan, Sudan, Somalia, Somaliland, Ethiopia and
Kenya; for the additional 150,000 b / d of crude oil demand , Priority purchase fromARAMCO.

The Djibouti government invests in the Damerjog refinery project and offers
various preferential policies for the project
• Acquire 30% shares of the project company. Fully open the Djibouti refined oil market for the Damerjog oil refinery project
while carefully exploring and operating the neighboring markets and expanding the market capacity.

China partners will plan, invest, operate and manage the project
• Acquire 50% shares of the project company.
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