African refiners prepare for oil tsunami

Mar 15, 2007 01:00 AM

Controlling the impact of what has been described as a veritable tsunami of oil products shortly to hit Africa from new refineries in Asia and the Middle East, is one of the major concerns of the one-year-old African Refiners Association (ARA) which held its second general meeting in Cape Town.
Up to 50 mm tons of refined product -- or 78 % of the annual consumption of the 48 sub-Saharan countries in Africa -- is expected to be added to the world market by 2010. With Africa being one target, the imports could end up causing the shutdown of some of the continent's refineries.

Concerned that the new Middle East and Asian refineries will not play by the rules of the World Trade Organisation (WTO), resulting in unfair practices, the ARA's Strategy Group, reporting back to the AGM, has recommended that consultants be commissioned to study the issue and come up with aggressive means by which Africa can defend itself.
The rollout of this issue has led to discussion among ARA members about how their industry may be facing many of the well-known threats that are constantly suffered by African industrialists and farmers. They fear repetition of the pattern whereby First World leaders promise assistance to Africa but, in practice, allow unfair competition to compromise emerging market enterprises.

At the conference however, a positive note was struck by the Sudanese and Angolan representatives who announced their intention to build new refining capacity to satisfy the growing African demand. In both cases, the new refineries could be economically justified by the need to process new streams of very acidic crude oils that command a low price in the international markets.
Following these announcements the ARA members strongly endorsed their belief that, as Africa is blessed with abundant crude oil it should be used to add value, generate employment and build workforce skills on the continent.

Following its inaugural meeting last year in Cape Town, the ARA, which represents most of the 38 oil refineries in Africa and is now registered in Geneva as an NGO, set up four working groups aimed, among other objectives, at sharing expertise in health and safety, a industry database, product specifications standards and strategic plans for the industry, continent-wide.
Already, the groups have participated in several meetings with other organisations interested in African refining. These include the World Bank in Washington, the African Union and African Development Bank Energy group in Addis Ababa and Cairo, the United Nations Environmental Programme (UNEP) and the World Bank air quality improvement conference in Nairobi.

Work groups have been very active on other fronts, including the approval of a standard set of “AFRI” fuel specifications to be applied regionally. They are designed for African conditions rather than the application of European specs. The objective is to eliminate regional product fraud and increase regional trade.
The Database Group has built the first African research, information and technical directory to help investors and financiers plan and evaluate refining projects. It also provides ARA members with a contacts list and skills inventory to allow exchange of knowledge and experience.

The Health and Safety Group is studying projects such as waste management in Africa where facilities are often limited. The group is also preparing to create benchmarks for refining processes to help members improve efficiency.
ARA reports that there has been very positive participation by members and associate members over an intense two day meeting in Cape Town. The conference has been addressed by a group of highly qualified speakers on a wide range of subjects including shipping, trade finance, trading patterns in Africa, biofuels and refining strategies related to the removal of lead in fuels.
“Refiners are realising the advantage of working together to gain knowledge and experience, and to address common problems,” says President of the ARA Joel Dervain, who initiated the formation of the association.

Following the conference, a two-day workshop for around 100 people has been arranged to discuss such widely ranging issues as “The future of Biofuels in Africa”, “Chinese involvement in African refining”, “Restructuring of markets -- who's coming and who's going?” and “Shipping trends -- what does the future hold?”.

Source: Business in Africa
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