OPEC projects increase refining capacity, reduction in fuel imports by Africa
The ongoing constructions of new petroleum refineries in some parts of Africa may lead to the closure of some moribund plants and the reduction in the importations of finished products from Europe to the continent in the next couple of years.
The Organisation of Petroleum Exporting Countries (OPEC) stated this in its 2020 outlook for the industry and noted that the ongoing construction of refineries in the continent will boost capacity by around 0.8 million bpd or 15 percent of the global volume.
OPEC estimated refining capacity additions between 2020 and 2025 at around 5.2 million barrels per day based on the review of announced and planned refinery projects.
“Significant capacity additions are also expected in Africa in the medium-term period. Additions of new refining capacity are clearly in line with oil demand growth expectations, which show positive trends in most developing countries,” the organization said in the report.
“This significant increase in refining capacity is somewhat larger than incremental demand in the medium-term and could help to reduce product imports, especially in West Africa.”
According to OPEC, in Latin America and Africa, there are a number of old and inefficient refineries that have relatively low utilisation rates.
“The new refining capacities, which are projected to come online in the medium to long-term, may increase pressure on these existing plants with two ways out – either closure or refurbishment.
“Both markets are expected to grow considerably, which would support refurbishment of older plants. However, due to the lack of financing and rising internal competition, some of these plants may be closed in the coming years.”
The oil cartel noted that the crisis caused by the outbreak of COVID-19 might lead to delays of some projects in this outlook, thus shifting commissioning dates from the first period towards the second half of the medium-term.
“Furthermore, the uncertainty is even higher for projects in the second half of the medium-term period.
Consequently, it is possible that some projects expected to go online in the medium-term period may become operational only after 2025,” it added.
Africa is projected to add 2.9 million bpd of distillation capacity by 2045, according to OPEC.
It said while the refining capacity additions in the medium-term are estimated at 0.8 million bpd, refinery additions in the period 2025–2030 are expected to be above 0.9 million bpd.
Dangote Refinery, being constructed by Africa’s richest man has a capacity of 650,000 crude oil per day and is expected to be on stream by end of 2021 or the first quarter of 2022.