Thursday, September 23, 2021

    Africa Nations Needs to Invest $15.7 Billion on Refineries to Curb Emissions

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    Naija247news Editorial Team
    Naija247news is an investigative news platform that tracks news on Nigerian Economy, Business, Politics, Financial and Africa and Global Economy.

    By William Clowes

    — African nations need to spend about $15.7 billion on their refineries to curb emissions and meet climate-change targets as demand for oil and gas surges, according to an industry lobby group.

    Governments on the continent should focus on reducing sulfur levels in petroleum products because Africa’s consumption of fossil fuels will rise quickly in the coming decades even as the supply of clean energy expands, said Anibor Kragha, executive secretary of the African Refiners and Distributors Association, or ARDA. The pan-African body, based in Ivory Coast’s commercial capital of Abidjan, promotes the interests of the downstream oil industry.

    A “leapfrog” switch by African nations from oil and gas directly to renewables isn’t realistic, Kragha said in an emailed response to questions. “Africa needs a unique energy transition roadmap.”

    Governments in wealthier nations have set ambitious targets for a rapid shift to renewable energy to slash carbon-dioxide emissions, with many countries and companies making commitments to achieving so-called net-zero by 2050. Africa has accounted for about 2% of cumulative global emissions, according to the International Energy Agency, a figure the Paris-based organization sees rising to only as much as 4.5% by 2040.

    Rising Demand

    Africa’s overall energy consumption is set to increase at twice the pace of the global average as populations and economies grow, the IEA said in a 2019 report. Demand for oil and gas in Africa is expected to double to at least 7 million barrels per day and 317 billion cubic meters respectively by 2040, even as the contribution of renewables is forecast to soar more than tenfold from its current low base, according to IEA estimates.

    ARDA’s immediate priority is facilitating Africa’s switch to “cleaner” petroleum products, Kragha said. The group is working with the African Union to introduce harmonized measures across the continent that cap sulfur volumes in gasoline and diesel to 10 parts per million by 2030. That would bring it in line with existing limits in major economies including the U.S., the European Union, China and India.

    Sulfur grades in African countries vary greatly, with some permitting up to 2,500 ppm for gasoline and 10,000 ppm for diesel. The share of low-sulfur products –- 500 ppm or lower – in the market is set to grow from 32% in 2019 to 91% by 2031, according to energy consultant Citac.

    Africa currently has more than 40 refineries that can process more than 3.5 million barrels of oil day, although some aren’t operational. The continent’s richest man, Aliko Dangote, is building a giant 650,000 barrel-per-day facility in Nigeria that plans to produce 50 ppm fuels.

    Funding Frameworks

    The 15 governments of the Economic Community of West African States have already adopted an ARDA proposal to implement policies to phase out imported and manufactured fuels with more than 50 ppm, Kragha said.

    Upgrading Africa’s refineries to meet the 10 ppm standard will cost about $15.7 billion, according to Kragha, citing a study by the AU and ARDA. The organization is developing funding frameworks with financial institutions, commodity traders and other firms to assist members with the revamps, he said.

    ARDA is also promoting tighter restrictions on the age and quality of used vehicles that can be shipped to African countries and liquefied petroleum gas as an alternative cooking fuel to charcoal and firewood, Kragha said.

    ARDA’s members and sponsors include African government regulators and state-owned energy companies, independent firms such as Nigeria’s Sahara Group and Rainoil Ltd., and international giants including TotalEnergies SA and Trafigura Group, according to the group’s website.

    ©2021 Bloomberg L.P.

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