By Toyin Akinosho
Africa’s crude oil refining capacity has contracted, while the continent’s demand for petroleum products has surged, in the last 30 years.
The emergence of Dangote refinery has closed the gap a little, but imports will trend upwards in the foreseeable future, according to latest analyses of the S&P Global Commodity Insights.
Africa’s petroleum product demand equaled its refining capacity sometime around 2010, S&P’s data shows, but the refining capacity has plunged by 21% in 14 years, while the demand has soared. The Dangote refinery has only mitigated the widening refining gap by 9% in the last one year, the analysts’ data indicates.
S&P analysts, who conducted a semi conference featuring presentations to a wide spectrum of upstream and downstream players in Lagos, Nigeria recently, have a dim view of the likely outcomes –and expected impact-of the several proposed refineries across Africa, including three in Angola, one in Uganda, several in Nigeria and a reported megaproject planned for Ghana.
“Pace of startups and closures is a key uncertainty”, for these projects, they said. “Demand has grown faster than supply, keeping refined products markets tight and margins high”.
The only country on the continent that could handle a Mega- refinery of the scale of Dangote is South Africa, the analysts said. “Such a Mega-refinery is likely a one-off”, they argued, but they were not quite forthcoming about whether such a project could ever make it again, from ideation to construction.
“African imports will increase as demand grows through 2050”, they conclude.
