Oil-rich Africa to remain dependent on fuel imports
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.