• Sat. Sep 30th, 2023

Dangote Refinery to cut Africa’s fuel imports to 36%, says APPO

ByBassey Udo

Jan 20, 2022

The establishment of the Dangote Oil Refinery will cut down the importation of petroleum products in Africa to about 36 percent, the African Petroleum Producers Organisation (APPO) has said.

Also, the organization said the success of the Dangote Refinery project could provide incentives to the execution of more of such projects across Africa, despite the current focus on energy transition.

The Secretary-General, African Petroleum Producers Organisation, Omar Farouk Ibrahim, said Dangote Refinery would be supplying over 12 percent of Africa’s petroleum products demand when it becomes operational.

He stressed the need to review some statistics on Africa’s petroleum products demand and supply to appreciate the impact the Dangote refinery would have on African economies, especially on the supply of petroleum products, and to some extent, the conservation of scarce foreign exchange.

“Currently, Africa’s daily petroleum demand is 4.3 million barrels per day (MBD). Of this volume, 57% is produced locally (on the continent), while 43% is imported. When Dangote Refinery is fully onstream, the percentage of Africa’s products import shall drop to about 36%.

“This is even as the total volume of products demand rises to 5.4 MBD. You can therefore see the huge impact that the Dangote refinery shall be makingto overall products supply in Africa. Dangote Refinery shall be supplying over 12% of Africa’s products demand.

“That is huge savings for a continent that has scarce foreign exchange and little to export. We shall save huge foreign exchange from buying abroad and from shipping and insurance costs.

“Furthermore, the success of Dangote Refinery could incentivize the rise of similar projects across the continent, the noise about energy transition notwithstanding,” he noted.

Ibrahim also hailed the decision by the President of the Dangote Group, Aliko Dangote, to go ahead with the construction of the crude oil refinery project, despite the campaign against fossil fuels, adding that the demand for fossil fuel would continue for several decades to come.

“We believe that (Aliko) Dangote made a very wise decision to proceed with the project, despite the campaign against fossil fuels. There will be demand for petroleum products for many decades to come. Indeed, we see petroleum products prices rising steadily in the next few years for at least two decades.

“This is because new refineries are not coming up in Europe and North America, where Africa imports 34% of its supplies because their governments have embraced energy transition, some willingly, others due to pressure.

“So, some of the sources of Africa’s imports are going to dry up. At the same time, Africa will not be in a position to fast-track the development of non-fossil fuels.

“In fact, even the developed countries will not be able to move as fast as is projected. We see Africa and many regions of the world continuing to rely on fossil fuel energy at a time when deliberate decisions are being made to stop funding fossil fuel projects. The world risks abandoning fossil for renewable energy, but in the end not getting the renewables, and at the same time losing the fossils due to deliberate neglect”, he explained.

Ibrahim urged African refiners to invest more on technology and develop the right expertise to manage their refineries, which are going to serve the continent as western refiners halt the establishment of more refineries.

African refiners, he said, have no cause to worry about their investments, adding that all they need to do was to ensure they developed the right expertise to manage their refineries, get honest managers and staff to run their business, and come together to join APPO’s initiative to establish foundries and other equipment manufacturing plants to service their refineries. He said once they have these, the market would be there for their products.

For the next three decades or more, he said Africa shall continue to use fossil fuel-driven vehicles, and with the continent’s population projected to double within that period, there would be a huge market for petroleum products.

He said Africa cannot rapidly transit into electric vehicles, as the bulk of the vehicles on its roads today and in the next 20-30 years are going to be non-electric. There is the market, and we should not be discouraged from thinking positively”, the APPO scribe said.

He disclosed that APPO was working with its member countries to construct cross-border energy infrastructure, like pipelines for crude and products as well as for oil and gas terminals, depots, etc.

“Once we have these infrastructures on the ground, the markets for African refiners shall not be limited to their home countries. Fortuitously, the African Continental Free Trade Agreement (AfCFTA), which came into force in 2021, will be there to support this initiative”, he added.

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