Africa’s efforts to supply more of its booming demand for fuel are being dashed by fierce competition from foreign oil refiners and traders flooding the $80 billion market with imports.
African governments want more oil refineries to cut fuel import bills and get better value from the continent’s own crude.
But the investors they so badly need are either withdrawing or shifting their focus to trading or storage to take advantage of the region’s demand growth of around 5 percent, higher than China and India.
For many distributors, it is cheaper to import fuel from refiners in India or the U.S. Gulf, and even China, than to source from old, often unreliable local plants.
“Our view is that growing African demand will by and large be met by imports,” said CITAC’s David Bleasdale.
The UK-based consultancy estimates that of a planned 1.1 million barrels per day (bpd) of new African refining capacity, only about a third, or 400,000 bpd, will likely be built.
India’s Essar said in October it would exit from its 50 percent owned Mombasa plant in Kenya, the last refinery in east Africa, which it had planned to upgrade, saying that it was “not economically viable in the current refining environment”.
Written by Emma Farge | Read more at Reuters