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Thursday, February 20, 2014
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No new African refineries without government clarity on policy, says African specialist consultancy.
London, February 18, 2014
In an environment of forecasted continuing weak refining margins, world-scale refinery plants, helped by low freight rates, will continue to pressurise product markets accessible by arbitrage, said David Bleasdale, Executive Director of London based African downstream specialists, CITAC Africa Ltd. He was speaking during the African session of Institute of Petroleum Week in London on Tuesday, 18th February 2014.
Despite economic and oil product demand growth rates among the highest in the world, the reality is that, with the exception of Algeria, Cameroon and potentially Uganda, African refinery investment continues to be stalled, Bleasdale said. This is despite the continent producing around 10% of the world’s crude oil.
CITAC argues that it is hard to be optimistic for African refinery investments unless oil producing countries decide that refineries are part of their strategic infrastructure, following the example of Saudi Arabia, and that governments are positive in their support for refiners and decide to encourage them through incentives, such as those seen in India in the past.
Bleasdale said the key factor in promoting African refinery investments in Africa was for governments to offer an ‘enabling’ environment:
He forecasted that the refineries most likely to survive, and invest in clean products and upgrading, will be the bigger, more complex refineries with large inland markets, limited exports and stable government.
Proximite crude supply, suited to local refinery configuration to fit local market product demand, offers a significant incentive to refine locally, he argued. Supply planning and plans to improve product quality should be on a REGIONAL basis, and the consequent investment needed – whether in refining or supply logistics – must be based on supply chains, not political considerations, he added.
For further details, please contact Karen Chevalier, CITAC Africa Ltd: [email protected], telephone: +44 20 7343 0014.
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