Dangote Refinery to reduce Africa’s petroleum importation by 36% – APPO

By Matthew Eloyi

African Petroleum Producers Organisation (APPO) has revealed that the establishment of Dangote Oil Refinery will bring about a 36 percent reduction in the importation of petroleum products into the continent.

The organisation also expressed optimism that the success of Dangote Refinery project could incentivise the rise of similar projects across Africa despite the current focus on energy transition.

The Secretary-General of APPO, Dr. Omar Farouk Ibrahim, said in an interview with newsmen that Dangote Refinery shall be supplying over 12% of Africa’s products demand when it becomes operational.

In his words, “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% is produced locally (on the continent) while 43% is imported. When Dangote is fully onstream, the percentage of Africa’s products import shall drop to 36%.

“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 making to overall products supply in Africa. Dangote shall be supplying over 12% 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.”

Ibrahim also commended Dangote’s decision to go ahead with the construction of 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.

“In fact, 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 further urged African refiners to invest more on 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.