NOT AN OFFICIAL UNCTAD RECORD

1. NOT AN OFFICIAL UNCTAD RECORD The Future of Africa’s Refining in a Liberalized EconomyBy Jamal M Ba-AmerSAMIR Deputy General Manager of Development

2. The International Context • Several African countries have: • Emergent economies • Low level of market liberalization • Business environment sufficiently attractive for private investments • World Bank promotes liberalization and transparency as pillars for development

3. The Industry Context • Lead phase out is finally on the agenda • Globalisation of car manufacturing will eventually bring clean fuels in Africa • Already happening in Morocco • Difficult for small refineries to remain financially viable in liberalized markets • Below 50,000 B/D it is difficult to justify even small investment in clean fuels projects • Some countries have privatised refineries, other are in the process of doing it

4. Africa is a very low weight player 4% of world capacity 3% of world demand

5. Does every country need a refinery? Morocco is the largest net ‘Energy importer’ in Africa Egypt Algeria Libya Size to be internationally competitive Nigeria Morocco • Security of supply is better provided by domestic refineries if demand is sufficient, but… • … most countries do not have sufficient oil demand to justify having an internationally competitive refinery

6. Energy-wise, there are several Africas… • Oil rich North Africa trades with the Mediterranean and is almost isolated from Sub-Saharan Africa • In Sub-Saharan Africa: • West Africa is oil-rich but little developed • East Africa is oil-poor and little developed • South Africa is the most developed economy

7. North-Africa Refining Capacity Export Refineries Competitive FOB Refinery MOH Competitive CIF Refinery SK • 243,000 B/D of capacity is at refineries smaller than 60,000 B/D • The 6 largest refineries are all simple hydroskimmers • Viability of the industry is a strategic issue mainly for Morocco

8. East-Africa Refining Capacity Mombasa Karthoum-Upgraded to enable processing of domestic crude • 9 refineries out of 11 may find it difficult to compete in a liberalized market • The remaining two are simple hydroskimmers

9. South-Africa Refining Capacity • Size and complexity are comparable to Western refineries • Superior economy of scale would justify further investment • Best positioned to be key regional suppliers in a liberalized market

10. West-Africa Refining Capacity Nigerian Refineries Abidjan • Three Nigerian refineries and the Abidjan refinery have size and configuration to be competitive. Nigeria is key to the region… • ….But the historical performance of the Nigerian refineries has not been satisfactory.

11. How much capacity is at refineries with a competitive size? • In Sub Saharan Africa only 1.5 million B/D has competitive size (less than any of the “Big-Four” EU countries taken individually) • Size is not everything. Significant effort (capital and know-how) required to make capacity operable and profitable

12. Does this capacity meet oil demand? • Morocco has the least oil production and needs to maintain competitive its only internationally-sized refinery

13. What about Sub-Saharan Africa? • West Africa would be served by a revival of the Nigerian refineries. Otherwise the region will remain a large importer of products. • The South African industry has surplus to serve East Africa

14. Conclusions – North Africa • North Africa is oil rich and has excess refining capacity • Refinery complexity is generally low • Some refineries may not be viable in liberalized markets • but this does not generally pose a strategic problem • Morocco is a special case • little crude production. The country must rely on a ‘Western-like’ refining industry

15. Conclusions – Sub Saharan Africa • Most countries do not have an internationally competitive refining industry • Capacity at competitively sized refinery would be sufficient, but performance has not been satisfactory • Key to the region is the successful privatization of the Nigerian refineries • East Africa lacks competitive capacity • South Africa has the most competitive industry. Well positioned to be a strategic supplier for others • Most countries will need to focus on secure product imports, rather than supporting a domestic refinery

16. The Refining industry in Morocco • Morocco has firm commitments towards liberalization • Adoption of Clean Fuels specifications (similar to EU) • There are two refineries, of which Mohammedia has an internationally competitive size • Samir is working at an important upgrading project for the Mohammedia refinery The project would give Morocco the only internationally competitive refining industry in the continent outside of South Africa and crude producing countries

17. SAMIR Upgrade Project Configuration Fuel gas AMINE 230 NAPHTA+GAZ GPL Essence légère Naphtha 810 C4 Fuel gas LPG Essence lourde Unité H2 REFORMING 1 430 ESSENCES 68 H2 riche gas Reformat REFORMING 2 1 KERO MEROX 2 8250 420 Jet/Kero DISTILLATION KERO HDS 3 Sulfure Unit GASOIL HDS 2500 100 3925 GASOIL H2 Naphtha HYDRO CRACKER 2600 1700 Gas oïl DSV Residue Fuel gas Naphtha FUEL OIL 1410 1400 Gas oïl VISBREAKER S W S DSV 150 561 Huiles de base COMPLEXE HUILES 130 Nouvelles unités Bitumes 207 Demin Water 200M3/h en Kt/A

18. Thank you for your kind Attention