The Future of Africa

1
The Future of Africas Refining in a Liberalized
EconomyBy Jamal M Ba-AmerSAMIR Deputy General
Manager of Development
NOT AN OFFICIAL UNCTAD RECORD
2
The International Context

• Several African countries have
• Emergent economies
• Low level of market liberalization
• Business environment sufficiently attractive for
  private investments
• World Bank promotes liberalization and
  transparency as pillars for development

3
The Industry Context

• Lead phase out is finally on the agenda
• Globalisation of car manufacturing will
  eventually bring clean fuels in Africa
• Already happening in Morocco
• Difficult for small refineries to remain
  financially viable in liberalized markets
• Below 50,000 B/D it is difficult to justify even
  small investment in clean fuels projects
• Some countries have privatised refineries, other
  are in the process of doing it

4
Africa is a very low weight player
4 of world capacity 3 of world demand
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Does every country need a refinery?
Morocco is the largest net Energy importer in
Africa
Egypt
Algeria
Libya
Size to be internationally competitive
Nigeria
Morocco

• Security of supply is better provided by
  domestic refineries if demand is sufficient, but
• most countries do not have sufficient oil
  demand to justify having an internationally
  competitive refinery

6
Energy-wise, there are several Africas

• Oil rich North Africa trades with the
  Mediterranean and is almost isolated from
  Sub-Saharan Africa
• In Sub-Saharan Africa
• West Africa is oil-rich but little developed
• East Africa is oil-poor and little developed
• South Africa is the most developed economy

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North-Africa Refining Capacity
Export Refineries
Competitive FOB Refinery
MOH
Competitive CIF Refinery
SK

• 243,000 B/D of capacity is at refineries smaller
  than 60,000 B/D
• The 6 largest refineries are all simple
  hydroskimmers
• Viability of the industry is a strategic issue
  mainly for Morocco

8
East-Africa Refining Capacity
Mombasa
Karthoum-Upgraded to enable processing of
domestic crude

• 9 refineries out of 11 may find it difficult to
  compete in a liberalized market
• The remaining two are simple hydroskimmers

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South-Africa Refining Capacity

• Size and complexity are comparable to Western
  refineries
• Superior economy of scale would justify further
  investment
• Best positioned to be key regional suppliers in
  a liberalized market

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West-Africa Refining Capacity
Nigerian Refineries
Abidjan

• Three Nigerian refineries and the Abidjan
  refinery have size and configuration to be
  competitive. Nigeria is key to the region
• .But the historical performance of the Nigerian
  refineries has not been satisfactory.

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How much capacity is at refineries with a
competitive size?

• In Sub Saharan Africa only 1.5 million B/D has
  competitive size (less than any of the Big-Four
  EU countries taken individually)
• Size is not everything. Significant effort
  (capital and know-how) required to make capacity
  operable and profitable

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Does this capacity meet oil demand?

• Morocco has the least oil production and needs
  to maintain competitive its only
  internationally-sized refinery

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What about Sub-Saharan Africa?

• West Africa would be served by a revival of the
  Nigerian refineries. Otherwise the region will
  remain a large importer of products.
• The South African industry has surplus to serve
  East Africa

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Conclusions North Africa

• North Africa is oil rich and has excess refining
  capacity
• Refinery complexity is generally low
• Some refineries may not be viable in liberalized
  markets
• but this does not generally pose a strategic
  problem
• Morocco is a special case
• little crude production. The country must rely on
  a Western-like refining industry

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Conclusions Sub Saharan Africa

• Most countries do not have an internationally
  competitive refining industry
• Capacity at competitively sized refinery would be
  sufficient, but performance has not been
  satisfactory
• Key to the region is the successful privatization
  of the Nigerian refineries
• East Africa lacks competitive capacity
• South Africa has the most competitive industry.
  Well positioned to be a strategic supplier for
  others
• Most countries will need to focus on secure
  product imports, rather than supporting a
  domestic refinery

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The Refining industry in Morocco

• Morocco has firm commitments towards
  liberalization
• Adoption of Clean Fuels specifications (similar
  to EU)
• There are two refineries, of which Mohammedia has
  an internationally competitive size
• Samir is working at an important upgrading
  project for the Mohammedia refinery

The project would give Morocco the only
internationally competitive refining industry in
the continent outside of South Africa and crude
producing countries
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SAMIR Upgrade Project Configuration
Fuel gas
AMINE
230
NAPHTAGAZ
GPL
Essence légère
Naphtha
810
C4
Fuel gas
LPG
Essence lourde
Unité H2
REFORMING 1
430
ESSENCES
68
H2 riche gas
Reformat
REFORMING 2
1
KERO MEROX
2
8250
420
Jet/Kero
KERO HDS
DISTILLATION
3
Sulfure Unit
GASOIL HDS
2500
100
3925
GASOIL
H2
Naphtha
HYDRO CRACKER
2600
1700
Gas oïl
DSV
Residue
Fuel gas
Naphtha
FUEL OIL
1410
1400
Gas oïl
VIS BREAKER
S W S
DSV
150
561
Huiles de base
COMPLEXE HUILES
130
Nouvelles unités
Bitumes
207
Demin Water
200M3/h
en Kt/A
18

• Thank you for your kind Attention