Africa looks to new refineries to reduce continent's product deficit

• Date: 01 May 2018
• Published date: 01 May 2018
• DOI: http://doi.org/10.1111/oet.12567

FOCUS

Africa looks to new refineries to reduce continent’s product

deficit

Africa has about 4.1% of the world’s oil consumption but

only 2.6% of global refinery production, which leaves it with

a large deficit that needs to be made up from imports. Recent

levels of refinery production have met only about 55% of

Africa’s total demand. The continent’s total refining capac-

ity, on the other hand, is sufficient to meet almost 90% of its

demand, but low throughput rates keep levels of production

well down.

These low run rates arise from a number of different

causes, ranging from shortages of equipment and inadequate

infrastructure to sabotage and civil war. In addition to these,

shortages of capital have prevented the upgrading and mod-

ernization of many of Africa’s oldest and least sophisticated

refinery plants.

The situation now looks set to change in a number of

cases where countries across the continent have begun to

announce plans for both new refineries and for the upgrading

of existing ones. New crude distillation capacity is proposed,

particularly in North and West Africa, with further, smaller

additions slated for the South and East. More upgrading is

also planned in order to meet new limits on sulfur for many

products. The infrastructure is also in need of improving.

The hope in most cases is to meet the expected increase in

demand, as well as to reduce Africa’s reliance on imports of

refined products. In some cases, the aim is to export products

as well.

1|REDUCING THE DEFICIT

Africa imports about 1.9 mn bpd of refined products. There

are some exports as well, mainly from North Africa, which

in turn amount to some 0.7 mn bpd, leaving the country with

a net deficit of 1.2 mn bpd: equivalent to just over 30% of

the total demand for refined products. The largest net deficit

is in West Africa, amounting to 0.5 mn bpd. North Africa’s

is the smallest thanks to its relatively high levels of exports

(see Table 1).

Africa has about 3.5 mn bpd of crude distillation capac-

ity, most of which is in just 5 countries: Egypt, Algeria,

Libya, Nigeria, and South Africa. Nearly all the refineries

are in coastal locations. There are few in the continental inte-

rior, and not many in East Africa, either. Last year, through-

puts were slightly over 2.1 mn bpd, or 60% of total capacity:

well below the global average (see Table 2). The African

refinery system’s proportion of upgrading to crude distilla-

tion capacity is also well below the world average, which

has delayed the introduction of clean fuels in many

instances.

The air quality of Africa’s largest cities has suffered

badly from the high sulfur content of fuels used there. There

have been attempts at a regional level to bring in lower

limits, but progress has been slow. East African countries

have together reduced the sulfur content of diesel to 50 ppm,

though this is 5 times the limit in Europe and in several parts

of Asia and the Americas. In some parts of Africa, the limit

is 3500 ppm, or even higher. In most cases, African refiner-

ies do not have the upgrading capacity to produce fuels to

European standards and many of the continent’s state-owned

refiners do not have the money to invest in new upgrading

units, although some have begun to look overseas for inves-

tors (see below).

2|NORTH AFRICAN PLANS

2.1 |Egypt

Egypt illustrates many of the problems that afflict the refin-

ery system across Africa. Years of under-investment in mod-

ernization and upgrading have left the country with a

number of old, small and unsophisticated refinery units that

produce large volumes of heavy residue for which there is a

declining market, as power generation, heavy industry and

shipping switch to other fuels, such as natural gas, in the first

2 cases, and marine gasoil in the case of ships’bunkers.

1

A

shortage of desulphurization capacity leads to the production

of diesel and other fuels that are high in sulfur: a situation

that in Egypt’s case is not helped by the fact that most of the

crude oil run in the refinery system is sour and often heavy

as well.

DOI: 10.1111/oet.12567

4© 2018 John Wiley & Sons Ltd wileyonlinelibrary.com/journal/oet Oil and Energy Trends. 2018;43:4–7.