Oil-rich Africa to re­main de­pen­dent on fuel im­ports

Weekend Argus (Saturday Edition) - - BUSINESS -

5 per­cent, higher than China and In­dia.

For many dis­trib­u­tors, it is cheaper to im­port fuel from re­fin­ers in In­dia or the US Gulf, and even China, than to source from old, of­ten un­re­li­able lo­cal plants.

“Our view is that grow­ing African de­mand will by and large be met by im­ports,” said CI­TAC’s David Bleas­dale.

The UK-based con­sul­tancy es­ti­mates that of a planned 1.1 mil­lion bar­rels per day (bpd) of new African re­fin­ing ca­pac­ity, only about a third, or 400 000 bpd, will likely be built.

In­dia’s Es­sar said in Oc­to­ber it would exit from its 50 per­cent-owned Mom­basa plant in Kenya, the last re­fin­ery in east Africa, which it had planned to up­grade, say­ing it was “not eco­nom­i­cally vi­able in the cur­rent re­fin­ing en­vi­ron­ment”.

Fuel mar­keters have boy­cotted puchases from the plant, blam­ing cost and qual­ity, and in­stead upped im­ports from com­pa­nies like Gulf En­ergy and To­tal.

Sim­i­lar up­grade projects such as Saudi Bin Laden Group’s plans to quadru­ple out­put at Sene­gal’s tiny 27 000 bpd re­fin­ery have never taken off. Even coun­tries with a steady crude sup­ply like Equa­to­rial Guinea have aban­doned projects, al­though big plants are pro­posed for oil producers Nige­ria and An­gola.

“Com­pe­ti­tion to sup­ply Africa is only go­ing to in­crease. Even if three projects do get built, there is no way they can keep up with de­mand growth,” said Ro­lake Akinkugbe, Ecobank’s head of oil and gas re­search.

The bank notes that over the last decade only seven of 90 re­fin­ery projects in Africa were com­pleted.

Larger, more so­phis­ti­cated plants in Asia and the Mid­dle East such as Re­liance’s 580 000 bpd ex­port plant in In­dia have an ad­van­tage as they can ad­just their range of fuel ex­ports quickly to ex­ploit fleet­ing ar­bi­trage win­dows in global mar­kets.

Traders like Glen­core and Vi­tol with global net­works can di­vert car­goes to meet sud­den de­mand changes.

“The con­stant chal­lenge is com­pet­ing with im­ports, with many global play­ers be­ing long in prod­ucts and seek­ing out­lets in Africa,” said Robert Turner, di­rec­tor at Price­wa­ter­house­Coop­ers con­sult­ing.

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