‘Dangote Refinery to reduce Africa’s petroleum product imports by 36%’

The African Petroleum Producers Organisation (APPO) has said that Dangote Oil Refinery would reduce importation of petroleum products production into the continent by as much as 36 per cent.

Besides, the organisation expressed confidence that the success of the project could incentivise the rise of similar projects across Africa despite the current focus on energy transition.

The Secretary-General, African Petroleum Producers Organisation, Dr. Omar Farouk Ibrahim, said in an interview that the refinery would be supplying over 12 per cent of Africa’s demand when it becomes operational.

Ibrahim stated, “To appreciate the impact that the Dangote refinery is going to have on African economies and especially on the supply of petroleum products, and to some extent the conservation of scarce foreign exchange, a look at some statistics on the continent’s petroleum products demand and supply is in order.

“Currently, Africa’s daily petroleum demand is 4.3 million barrels per day (mbd). Of this volume, 57 per cent is produced locally (on the continent) while 43 per cent is imported. When Dangote is fully operational, the percentage of Africa’s products imported shall drop to 36 per cent. This is even as the total volume of products demand rises to 5.4 mbd.

“You can therefore see the huge impact that Dangote refinery shall be made to overall products supply in Africa. Dangote shall be supplying over 12 per cent of Africa’s products demand.

“That is huge savings for a continent that has scarce foreign exchange and little to export. We shall save from buying abroad and from shipping and insurance costs. Furthermore, the success of Dangote could incentivise the rise of similar projects, the noise about energy transition notwithstanding,” the oil analyst noted.

Ibrahim also hailed Dangote’s decision to go ahead with the construction of a crude oil refinery despite a campaign against fossil fuels, adding that the demand for fossil fuel is going to continue for several decades to come.

“We believe that 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.

“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, 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 in 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.

He stated: “African refiners have no cause to worry about their investments. All they need to do is to ensure that they have 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. Once they have these, the market is there for their products.”