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By Kingsley Jeremiah, Abuja
24 May 2022   |   4:05 am
Energy and financial experts have raised concerns over the state of refineries across Africa, insisting over 90 per cent of refineries on the continent require urgent upgrade.

Energy and financial experts have raised concerns over the state of refineries across Africa, insisting over 90 per cent of refineries on the continent require urgent upgrade.

Without this, the stakeholders who gathered at the second Refining & Specifications Virtual Workshop organised by the African Refiners and Distributors Association (ARDA), noted that achieving net-zero, Paris Agreement and other agreements targeting a cleaner environment may remain elusive.

With growing divestment and capital reallocation away from hydrocarbons and into renewables/energy transition, the stakeholders noted that consideration for Environmental, Social, and Governance (ESG) is the downstream segment of Africa’s petroleum industry now remained a key leeway to the over $15.7 billion required for the continent to improve its refineries.

Speaking at the event, oil and refining research analyst at Vitol, Maryro Mendez noted that despite the withdrawal of funds from fossil fuels, investment alongside sustainability plans is on the rise.

Quoting Bloomberg statistics, she noted that sustainable debt yearly issuance now hovers around $824.7 billion as capital raised for renewables and PE funds now dominate the energy sector.

Mendez noted that 66 carbon regimes around the world led to a lack of carbon policy, price and timing of implementation.

According to her, lack of uniform policies make it difficult for refineries to pass on the cost of carbon to its customers as carbon price shifts the cost burden of climate change, from society as a whole to the entities responsible for the emissions, providing lack of incentive for refiners to reduce emissions.

“The refining sector accounts for only three per cent of the global energy sector emissions. While refineries’ contribution to global energy sector emissions is low, the opportunities for reducing them are significant. Refineries globally have started thinking about measuring, monitoring and reducing carbon emissions. Environmental sustainability has to be a priority for refiners and Africa is no exception,” Mendez said.

She decried that 80 per cent of refinery carbon emissions come from fuel combustion, hence fuel source and energy optimisation would present the biggest opportunity to reduce emissions.

Mendez stated that as a number of options exist for refiners, the technologies already exist to develop a refinery that has net zero carbon emissions, adding, “The challenge is not technical but is commercial with facilities requiring sufficient incentive and capital to invest without impacting on their competitive position”.

Executive Secretary of ARDA, Anibor Kragha, who had noted that adoption of harmonized specification would halt importation of fuels not meeting the AFRI specs into Africa and give existing refineries until 2030 to upgrade their facilities to produce the cleaner, lower sulphur AFRI-6 (10 ppm) specifications noted that targeted financing is urgently needed for projects to upgrade refineries and infrastructure to produce and transport Cleaner Fuels.

According to him, Africa suffers from modest utilisation, with a few bright spots, compared to other regions.

He noted that there is currently uneven progress in tightening specifications across Africa, adding that African Union and ARDA are collaborating on adoption of AFRI Fuels Roadmap.

Kragha had earlier said: “Another key focus area is for African countries, especially those sharing common fuel supply chains, to develop an integrated policy covering both fuel quality and vehicle exhaust emissions to achieve the ultimate objective of Clean Air in our African cities. Without this integrated and coordinated policy, the objective of clean air will not be realized whether by imports or local production.”

Speaking on “Upgrading refineries to produce AFRI-6 standard fuels,” Data Manager at CITAC, Richard Augood, said investment is still needed to make African refineries comply with AFRI-6.

With AFRI-6, Africa is expected to adopt harmonized AFRI Clean Fuel Specifications across the continent. The Cleaner Fuel specification recommends 10 ppm sulphur for gasoline by 2030.

For compliance in the aspect of gasoline, Augood noted that North Africa like Algeria would upgrade its Adrar refinery to include Naphtha hydrotreating (NHT), CGDS, Benzene extraction, Alger, Arzew and Skikda refineries would also require the same upgrades.

Also speaking at the event, Honeywell-UOP’ Luque Guillermo decried that the oil and gas industry has been hit hard by the current global economic situation with rapid drops in demand, changing mix of preferred products, volatile crude prices, and difficulty safely staffing production sites.

This prevailing development, according to him, is forcing demand for some products such as diesel and naphtha to exceed demand for gasoline and jet fuel.

He said the sector now has to cope with new ways of working which is making workforces to operate remotely.

Guillermo said there is also an increasing need for sustainability efforts with tighter scrutiny on human, safety and environment factors.

Many predict a plateau in global demand for transportation fuels and a lasting shift to petrochemicals, Guillermo noted, adding that digital strategies and technologies to support the future of refining are in focus.