African Refining in The New Decade

The African refining sector continues to evolve, with challenges encountered and opportunities seized. Headline projects, such as the 650,000 b/d Dangote refinery, have spurred new optimism in the sector. Meanwhile, the continent remains a net importer of products and net exporter of crude oil, prompting the question: is there a gap in the market for investors?

Recent events have shown the volatility that the refining industry must endure, including the unfolding coronavirus outbreak and crude price collapse. The challenge for those looking to develop projects on the continent going forward will be to present a concept that can withstand market pressures and remain economically justified. In a capital-intensive industry with a volatile margin driven by international events, which requires a high level of professional risk management and operational competence.

Key challenges for refiners include:

• Evolving road fuel specifications
• IMO bunker specifications
• Competition from world scale facilities outside of the region
• Technical incidents and maintenance programmes
• Financing

Despite the tough operating environment, there is a broad array of projects under development in Egypt, Algeria, Gabon, Senegal, South Africa, Nigeria, Uganda, Angola. This article highlights the criteria underpinning successful refining projects in Africa and how this will shape the future of the industry on the continent.

This is an extract of the Insight Paper published in CITAC’s Sub-Saharan Africa Oil Market Report (April 2020)