Africa’s crude oil demand is set to more than double to 4.5 million barrels per day (bpd) by 2050, which will need more than $100 billion in investment in refining over the next decades, according to the African Refiners and Distributors Association (ARDA).
Thanks to population growth, urbanization, and industrialization, Africa’s crude oil consumption is expected to jump from 1.8 million bpd in 2024 to as much as 4.5 million bpd by 2050, ARDA Executive Secretary, Anibor Kragha, has said, as carried by African news outlets including Arise News.
The expected surge in demand positions Africa’s refining industry as one of the world’s biggest untapped investment frontiers, according to the association.
Despite the growth in consumption, Africa remains reliant on fuel imports, which expose many of the countries on the continent to price swings, supply disruptions, and reduction of their foreign exchange (forex) reserves, ARDA’s Kragha said.
“Downstream investment has stagnated even as upstream production grows, leaving Africa stuck in the costly paradox of exporting crude and importing refined products at a premium,” ARDA’s Kragha said.
To boost domestic fuel supply, Africa will need more than $100 billion in upgrades of mothballed or dilapidated refineries, expansion of existing refining capacity, and new greenfield projects to supply fuels, the African refiners’ association reckons.
A key hurdle to Africa-made fuels is the lack of harmonized fuel specifications, Kragha noted, adding that out of 54 countries in Africa, as many as 46 maintain various national fuel standards. All these mean there are 12 different gasoline and 11 diesel varieties being sold across Africa.
“Africa’s downstream sector is one of the world’s last large-scale, high-growth energy investment frontiers. The demand curve is defined by demographics. The supply deficit is structural. The capital requirement exceeds $100 billion. And the economic upside is transformative,” Kragha said.
By Tsvetana Paraskova for Oilprice.com
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