All posts tagged downstream

The Egyptian government has raised the price of diesel for the first time in three years, hoping to reduce its subsidy bill by 13% as global energy prices head north.

The action effectively adds diesel to the basket of petroleum products whose prices the government has raised, in the context of the ongoing global energy crisis.

Egypt is one of Africa’s largest energy-subsidy economies. The government subsidises piped natural gas to households; prices of gasoline and cost of diesel.

Egypt’s pricing committee has routinely raised the price of gasoline in the last 18 months, but it had not included diesel: the main fuel used in public transportation as well as transportation of commodities.

Egypt uses diesel in transportation than it uses gasoline contrary to many other countries.

The fuel pricing committee increased the price of diesel to 7.25 Egyptian Pound (EGP7.25) per litre from EGP6.75, as well as hiked petrol prices by up to 10%, the Petroleum Ministry said in a statement The new prices went into effect immediately and will remain unchanged until the beginning of the fourth quarter 2022.

North Africa’s largest economy and the Arab World’s most populous state had absorbed the extra cost of diesel after global fuel prices shot up on the back of the Russia-Ukraine war — and was facing an annual diesel subsidy bill of $3.3Billion EGP 63Billion, according to Mostafa Kamal Madbouly, the country’s Prime Minister. A liter of diesel had cost EGP 11 on average since April 2022, of which EGP 4.25 was subsidized by the government, costing it $285Million (EGP 5.4Billion), Mr. Madbouly explains, adding that the little hike should reduce the state’s subsidy bill to $2.9Billion (or EGP55Billion).

Gasoline (petrol) prices also rose as follows

95-octane is EGP 10.75 per litre, up 10.3% from EGP 9.75;

92-octane is EGP 9.25 per litre, up 5.7% from EGP 8.75;

80-octane is EGP 8.00 per litre, up 6.6% from EGP 7.50.

Mazut fuel oil prices rose by 8.7% to EGP 5,000 per ton for all industries except food and electricity producers, who continue to be charged EGP 4,200 per ton.

This is the sixth consecutive quarter petrol prices have risen. The price at the pump is now up 23-28% since last April, depending on which grade you’re putting in the tank.

But the country has a dilemma of declining value of its currency against the American dollar, meaning that prices, even as they have adjusted, remain far below global market levels. What’s more: foreign reserves have plummeted to 5-year lows, as subsidy spending surges.

“These new price increases were substantially less than the 13% fall in the value of the Egyptian pound against the US dollar over the previous quarter (from $1=E£16.1 to $1=E£18.5)”, reports MEES, a industry trade journal which publishes weekly analyses of the Middle East’s oil and gas developments. “As such the latest prices are actually lower in dollar terms than those three months earlier. Indeed, in dollar terms the latest gasoline prices are only fractionally higher than those two years earlier at the height of the COVID 19-induced slump in oil demand when global oil prices were well under half current levels”, MEES says.

British Petroleum Southern Africa (bpSA) has sold one of its 100% owned liquid bulk fuels import terminals to black women-owned and managed independent petrochemicals company Wasaa in what is regarded as a landmark transformation deal.

The terminal is located at the Port of East London, in South Africa’s Eastern Cape Province.

Prior to the sale, bpSA had six fuel storage terminals, two 100% owned by bpSA, (one of which is now sold); two (Alrode and Pretoria) jointly owned with Sasol (50/50); one (Island View) jointly owned with Shell (50/50) and one (Rustenburg) owned by Astron (⅓), bpSA (⅓) and Engen (⅓). We invest in our terminal infrastructure to provide world class road and rail gantries, fire-fighting capability, tanks and pipelines.

Johannesburg-based Wasaa is a subsidiary of the Wasaa Group, which was founded and is led by Nokwanele Qonde, aranking South African female entrepreneur.

In line with the agreement, Wasaa Terminals has also acquired 100 percent of the terminal’s movable assets and a 20 percent stake in the berth to terminal pipeline. Sout Africa’s top finance website Moneyweb reports that Wasaa Terminals began taking over terminal responsibilities on December 6, 2021.

bpSA will retain the operations of its transport business operating outside of East London. Wasaawill provide terminal storage and handling services to bpSA in the Eastern Cape port city.

French logistics group Bolloré has received an offer from the Mediterranean Shipping Company (MSC), a Switzerland based operator in container transport and logistics, to acquire 100% of Bolloré Africa Logistics, comprising of all the Bolloré Group’s transport and logistics activities in Africa, based on an enterprise value, net of minority interests, of €5.7Billion.

Bolloré says it has granted the MSC Group an exclusivity until 31 March 2022 “to submit a put option”. Closing this sale will then require obtaining regulatory authorisations and the approval of the competent competition authorities.

“The Bolloré Group has decided to study this offer, which protects jobs and preserves its projects and commitments on the continent. It remains fully convinced of the potential of Africa, where it will continue to be actively involved in television (Canal+, MultiChoice), communications, entertainment, publishing and as a broadband internet access provider”, the group says in a statement. “The Bolloré Group reaffirms its commitment to invest and expand in the region.

“The two groups share many similarities. MSC is a European family group with a long-term vision that places its employees at the heart of its business strategy.

“The MSC Group has made significant investments in Africa in recent years and has great ambitions for the African continent. Its investment capacity, resources and market expertise would provide a new impetus to the projects that the Bolloré Group has designed, built and developed.

This transaction, if it comes to fruition, will not be completed until several months later*. The satisfaction of the Bolloré Group’s customers and partners remains a priority and, therefore, Bolloré Transport & Logistics will continue to honour its commitments by pursuing its projects, its investments and its goal to develop logistics ecosystems in Africa.

The Bolloré Group will ensure that its transport and logistics activities concerned with the MSC group’s offer continue to act independently of MSC so long as the competent authorities have not approved this project.

*MSC has an exclusivity period until 31 March 2022

Gastec and Cargas, two Egyptian government owned gas suppliers, have signed a cooperation protocol for adding facilities to supply natural gas inside ExxonMobil fuel stations in the country.

The three parties will start the first phase of establishing facilities for supplying cars with compressed natural gas (CNG) in an average of 50 stations, followed by another phase targeting ExxonMobil stations across Egypt, according to the agreement.

By getting ExxonMobil to include CNG supply, Egypt is involving a key fuel retailer in its plan to increase the usage of natural gas in the country.

ExxonMobil is one of the biggest fuel retailers in Egypt, with more than 350 service stations and more than 25 convenience stores, christened On the Run.

The company claims to be the market leader in petroleum product technology in North Africa’s largest eonomy, offering its clients “highly recognized lubricants, industrial greases and expert lubrication programmes and services”, and now, at the behest of the government, it has to include CNG.

In what it calls the natural gas transition, the government is setting up a financing programme through the country’s banks to extend $77Million (or EGP 1.2Billion) in low-interest loans for car owners to convert their vehicles to run on dual-fuel engines; see 150,000 cabs and minibuses outfitted with dual-fuel engines over the course of three years and set up infrastructure in seven governorates to accommodate engines running on natural gas in the first phase, with the remainder of the programme to be expanded to the rest of the country.