Africa’s refining industry on the path of recovery, shows new Hawilti report

The reopening of some refineries in Africa and the gradual commissioning of new facilities will mark the recovery of the continent’s downstream industry in 2023, according to Hawilti’s African Refineries Watch published today.

While sub-Saharan Africa’s refining capacity is still under-utilised at some 40%, recovery is on the horizon with the re-opening of South Africa’s Astron Energy Refinery (100,000 barrels per day – bpd) and Ghana’s Tema Oil Refinery (45,000 bpd). Once both facilities are back in operations, the sub-continent will be able to utlise about half of its installed refining capacity.

Refining capacity to get a boost in West Africa

Ghana is also expecting to commission soon the Sentuo Oil Refinery, a 3 train multi-product crude oil refinery built within the Tema Industrial Zone with a targeted production capacity of 120 000 bpd. Its initial phase will have a capacity to produce 2 million tonnes per year (tpy) of petroleum products, almost doubling the country’s refining capacity. This is welcome news for Ghana who has seen its imports bill soar in recent months, reaching almost $4 billion in 2022 in premium and gasoil imports, according to the Bank of Ghana.

But much larger change is currently happening in Nigeria, with the upcoming commissioning of the 650,000 bpd Dangote Refinery. The facility is scheduled to be inaugurated on May 22nd just before President Buhari leaves office and will cement Nigeria’s position as Africa’s leading refiner.

Hawilti expresses cautious optimism on the commissioning of the Dangote Refinery, pointing to the complex and lengthy process required to reach full production. In its most recent report on Nigeria, the IMF for instance did not expect the refinery to reach full capacity right away, assuming a production of only 100,000 bpd in 2024 and 200,000 bpd in 2025.

Meanwhile, Nigerian modular refineries have managed to navigate the country’s challenging business environments and found ways to secure new feedstock options to run small-scale facilities. Both the 1,000 bpd Edo Refinery and the 2,500 bpd Duport Midstream Refinery for instance are currently receiving crude oil by trucks from a marginal field in the Niger Delta to support their operations. The Edo Refinery is also undergoing significant expansion, with owner AIPCC Energy expecting to reach a capacity of 30,000 bpd at the end of this year and up to 100,000 bpd in 2024.

“The drive to develop downstream assets with emphasis on refineries in emerging economies coupled with global energy volatility and evacuation challenges in some African countries is fueling the interest in the development of modular refineries,” declared Souheil Abboud, Managing Director at VFuels LLC. “The benefits of decentralizing refining infrastructure are one of the main reasons for the growth of modular refineries in Africa, and especially Nigeria. We are surely witnessing a growing demand for more sustainable infrastructure assets and an interest from Nigerian developers to integrated low-carbon electrification options within their future refining infrastructure. VFuels is proud to have completed an engineering FEED package that integrates renewable power solution for a refinery project in Nigeria.”

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Africa’s offshore rigs count climbs to new highs amidst drilling frenzy

Africa’s offshore rigs count has kept growing since the start of 2023, with 36 drilling rigs contracted this year so far. Recent contract extensions and new contract awards have confirmed 2023 as one of the biggest years for offshore drilling activity on the continent in a decade, shows the new Offshore Rigs Tracker released by Hawilti and the Caverton Offshore Support Group (COSG) Plc. Nigeria is playing catch up Nigeria, who has lost its position of top African oil producers several times on the back of repeated crude theft and pipeline vandalism, is showing signs of recovery. Several of the rigs mobilised offshore Nigeria have been extended, including the Valaris DS-10 for SNEPCo and Shelf Drilling’s Baltic and Mentor rigs for TotalEnergies and First E&P respectively. In addition, Shelf Drilling has also secured new contracts for the Adriatic I and the Scepterunits which are providing a boost to Nigeria’s offshore drilling activity. In total, Nigeria will see eight offshore drilling campaigns take place this year at any point in time, putting it at the same level as Angola. The southern African country had long held the position of top drilling destination on the continent as international oil companies (IOCs) have several rig mobilised on long-term contracts there to support infill, development, and exploratory drilling in deep-water. “The recovery of Nigeria’s offshore drilling activity is welcome news as the industry continues to be a main driver of the Nigerian economy. This is in turn providing unique opportunities for aviation services providers to pursue growth opportunities and provide safe and sustainable solutions to transport workers and equipment to offshore drilling rigs and platforms,” said Capt Ibrahim Bello, Managing Director at Caverton Helicopters. “Such market activity also contributes to the development of other sectors such as search and rescue, VIP transport, and executive charter services,” he added.   TotalEnergies is leading the pack The French major has imposed itself as the most active operator offshore Africa this year, with a total of eight rigs mobilised throughout 2023, including three in Angola, two in Nigeria, two in Namibia, and one in West Africa whose destination is yet to be disclosed. The company’s Namibian campaign represents tome $300m of investment to appraise its Venus discovery, drill the Nara prospect, and execute drill stem tests (DSTs). In Nigeria, TotalEnergies is also drilling the Ntokon Central shallow water prospect on OML 102, but more importantly executing a multi-well deep-water campaign on its Egina and Akpo hubs within OML 130. Egina is notably experiencing a rapid production decline which the drilling campaign seeks to address. Up to nine wells are scheduled on both Egina and Akpo, including potential exploratory drilling of nearby prospects. Exploration is heating up Exploration activity is also supporting the drilling momentum, with rigs mobilised across frontier markets to spud several much-anticipated wildcats. Eni has contracted the Capella drillship to drill the Raia-1X well offshore Mozambique, with results yet to be announced. New rig contracts have also been awarded by Galp to spud two wells offshore Namibia later this year, and by Shell to drill a wildcat offshore Mauritania at the end of 2023. “Any new discovery is likely to provide further impetus to explore African basins and make the best of the current high oil prices cycle,” noted Mickael Vogel, Director & Head of Research at Hawilti. “However, the rigs market remain extremely tight and under supplied. High mobilisation rates and lack of rig availability is already slowing down the pace of activity and delaying several drilling plans by operators offshore Africa.” 

Gabon inaugurates historic gold refinery

The Gabonese Gold Refinery (ROG), the first gold processing plant in Gabon, has come on stream, as the oil producing country pushes for a more diversified economy. With a refining capacity of 7 to 10 tonnes of gold per year, the plant is a joint venture between the state-owned Equatorial Mining Company (SEM) and Alpha Centauri Mining (ACM), a company held by British and Emirati investors. Currently, total national gold production is estimated at around 2 tonnes. Located in the Special Economic Zone at Nkok in Libreville, the gold refinery is based on Italian technology, has zero emissions and 100% Acid Recovery, according to ACM. “It symbolizes the metamorphosis of our economy towards more diversification, job creation and local added value through the on-site processing of our raw materials,” President Ali Bongo Ondimba said during the commissioning of the project earlier this month, adding that Gabon plans to refine “100% of the gold produced in the country, make our country a hub for gold refining in Central Africa and allow up to a third transformation on site in particular to make jewellery in Gabon.” Last year, the Government of Gabon signed convention agreements with Alpha Centauri Mining (ACM) to boost gold exploration, exploitation and refining in the country. The company entered Gabon in 2016. The agreements set the framework for the commissioning and operation of the country’s first gold refinery. Mining for growth and development The commissioned refinery forms parts of efforts to develop Gabon’s gold potential as it seeks to expand an economy largely dependent on oil. The Central African nation is already one of the world’s top manganese producer and exporter but wants to develop additional minerals found in its soil. In a bid to attract investors and support local content development in the mining industry, Gabon adopted a new code for the sector in 2019. Earlier this year, minister for investment promotion and public-private partnerships Hugues Mbadinga Madiya echoed the government’s efforts to curb the export of raw materials as a means to improve higher value-added trade. “The general policy of the Gabon government is not to export raw materials,” Mbadinga Madiya told newsmen on the sidelines of the Africa Investments Forum & Awards in Paris in February. “The model of supplying raw materials does not create jobs.”