European Refiners Battle to Tap African Demand

October 29, 2013

Embattled European refiners face an uphill battle with U.S. and Asian competitors to supply Africa's rapidly growing appetite for fuel products as transatlantic shipping routes are redrawn, Reuters said on October 28.

Demand for oil products in Africa, including the north of the continent is expected to grow by more than 20 percent in the next seven years to 4.4 million barrels per day (bpd), according to Vienna-based consultancy JBC Energy.

Nigeria, Senegal, Togo, Kenya and South Africa are expected to see the fastest demand growth in sub-Saharan Africa, analysts say, while the continent's refining capacity is far from matching this demand and will only marginally grow by 2020 from current crude processing volumes of 1.925 million bpd.

"Most countries in the African continent prefer to import finished products rather than produce in small outdated plants. It's a question of technology and it turns out cheaper to import," said David Wech, JBC Energy managing director.

Traders including Puma Energy, the African subsidiary of Trafigura TRAFG.UL, Vitol, Gunvor and Mercuria have invested heavily in expanding their African operations in recent years.

"We see double digit growth in most African countries, in line with the expansion of Africa's middle class," an official in a large European trading house operating in Africa said.

Copyright: Reuters, 2013