The Organisation of the Petroleum Exporting Countries said on Tuesday that Africa’s refining outlook had improved, with Dangote project accounting for half of the 1.2 million barrels per day of new capacity expected by 2026.
The oil cartel said this in its 2021 OPEC World Oil Outlook, which was launched in Vienna, Austria.
It said, “Africa currently exports over a third of its extracted fuels; however, in the long-term, due to the projected rise in the continent’s population and the increased desire for urbanisation, it will be necessary for the continent to consume these fuels locally, and in a manner that meets global emissions standards.
“There is also a need for investments in the downstream sector, particularly refining, either by upgrading existing facilities or through building new ones.”
According to the report, one of the ways to finance these projects could be for governments to seek financial partnerships with the private sector for the expansion of their refining and petrochemical industries.
It said, “Africa’s medium-term outlook looks more optimistic relative to the WOO 2020, with 1.2 mb/d of new capacity expected by 2026. Half of this is accounted for by the 650 tb/d Dangote project in Nigeria, which is likely to come on line in 2022. In addition, there are several smaller projects in West Africa, mostly located in Nigeria, Angola and Ghana.
“These projects include a number of pre-fabricated modular facilities. Once commissioned, these projects will help to reduce product imports to Nigeria and West Africa and will, in turn, increase the use of local crude. In North Africa, refinery capacity expansions are likely in Algeria and Egypt.”
OPEC noted that the African energy sector had made progress in recent years regarding energy policies that would enhance the continent’s socioeconomic development.
The report said, “The continent of Africa is home to an abundance of energy resources, including about 10 per cent of the world’s oil reserves; however, it still has difficulty in harnessing these precious resources to meet its energy demand. This, in turn, hinders efforts to provide affordable and reliable energy required for economic growth and development.
“Africa has yet to unlock its huge potential in the energy sector, although its ever-increasing population growth and economic prospects require more energy.
“This drawback is mostly due to regional uncertainties, as well as government policies and regulatory frameworks guiding the energy sector, and more recently the efficiencies required to reduce CO2 emissions in exploration and production activities.
“These challenges have made it increasingly difficult to secure much-needed financing for E&P from foreign investors.”
The report noted that the impacts of the COVID-19 pandemic had also been a major setback, especially for those countries depending heavily on revenue from fossil fuels for their economic growth and development.