‘How Africa can build ‘refineries of the future’ despite funding challenges’
With growing energy demand and rapidly rising population, the African Refiners and Distributors Association (ARDA) has said delivering, “Refineries of the Future”, is the continent’s best option to lowering environmental footprint of existing refineries and averting looming potential public health issues.
Noting the move will help in producing cleaner fuels in the near-term while also focusing on higher value petrochemicals, Executive Secretary of ARDA, Anibor Kragha, in a presentation at the Africa Energy Futures Forum held in Houston, USA, said it has now become imperative for African countries to adopt a unique energy transition plan that promotes cleaner transport and cooking fuels in the near-term while taking on proven, cost-effective renewable energy solutions in the mid-to-longer term.
Kragha also stated that the path to delivering this African Energy Transition Plan would require an accompanying finance plan, which would promote investments in world-class, integrated refinery and petrochemical complexes as well as critical LPG storage and distribution infrastructure.
While only 20 countries in Africa have refining operations, with their capacity utilisation already down to 55 per cent on average, Kragha stated that existing refineries would need to be upgraded to produce AFRI-6 (10 ppm sulphur) fuels in line with ARDA AFRI Fuels Roadmap.
According to him, new refineries, like the Dangote Refinery in Nigeria and the ERC Refinery in Mostorod, Egypt, would be designed to produce these cleaner fuels.
Kragha also lamented the current situation where only six African nations have LPG storage capacity above 50,000 metric tons (MTs) leading to uneconomic cargoes and increased LPG landed costs.
This overall situation has, according to him, resulted in Africa’s petroleum products shortfall (demand vs refinery output) growing significantly over the years, a development, which poses significant concerns for the continent’s energy security.
Kragha stated that significant investments are required in integrated refining and petrochemicals plants to meet growing demand and reduce imports as well as in large-scale LPG infrastructure to effectively promote replacement of biomass with LPG as clean cooking alternative across Africa.
Kragha, who noted that Africa’s futuristic refineries must be flexible and efficient, said policies that would provide an enabling environment for investments, including clarity in regulatory frameworks and compliance requirements would help the continent to attract much-needed capital for future world-class refinery projects.
While stressing that measured, decade-by-decade Sustainable Finance Plan would be required to ensure investments are made to deliver a unique African Energy Transition Plan, Kragha said digitalization, machine learning, decarbonization, safety and reliability, efficiency and funding were key to refineries of the future in Africa.
He also stated that separate frameworks are required to promote cleaner transport and cooking fuels, lower-carbon power generation and renewables.
ARDA had previously stated that about $15.7 billion (+/-50%) would be needed to upgrade the existing 36 refineries on the continent.
The challenge would be to ensure that these refineries are converted into efficient centres of excellence wherein latest technology is used to deliver cleaner, higher-value products while significantly reducing emissions, ARDA noted.
Recall that a further $7.5 billion has been estimated by the Shell Foundation as the requirement to displace charcoal with modern cooking fuels across Africa, Kragha said: “Complex, inefficient supply chains and intra-African trade challenges are currently impeding implementation of cost-effective clean energy solutions, but the African Continental Free Trade Agreement (AfCFTA) presents opportunity for the African Union and the respective Regional Economic Commissions to implement a harmonized Energy Transition Plan.”
Ultimately, Kragha said: “Refinery of the Future” will need to minimize production of fuels and instead focus on converting crude oil directly to petrochemicals via modern alternative technology and delivering higher capital efficiency via a lower overall environmental footprint.