Page 4 - Downstream Monitor - MEA Week 35

DMEA Commentary DMEA
Fuels in focus in East Africa
Fuel news across the region illustrates sensitivity to fuel supply issues where mid- and downstream facilities are lacking
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What:
A lack of pipeline and refinery access has led East African states to employ novel means of sourcing fuel while others remain precariously balanced between subsidies and fuel marketers.
Why:
The region is significantly lacking in downstream capacity, and pipeline and trucking links to coastal import terminals are relied upon for fuel.
What next:
The completion of a refinery in Uganda is probably several years away and despite reports, Mozambique is not likely to build one.
NEwS from throughout East Africa this week has illustrated the delicate situation the region finds itself with regard to the security of fuel supply, and host governments are keen to improve interconnectivity in the absence of local refineries.
A 60,000 barrel per day (bpd) facility is being built by the Albertine Graben Refinery Consor- tium (AGRC) at Hoima in Uganda to process oil produced from the country’s Lake Albert fields. However, a final investment decision (FID) is not anticipated until mid-2020 after France’s Total and China National Offshore Oil Co. (CNOOC) delayed decisions on the upstream Tilenga and Kingfisher projects respectively, as well as the East Africa Crude Oil Pipeline (EACOP), the heated conduit that will take the waxy crude to the Tanzanian port of Tanga. The region’s only refinery was the Kenya Petroleum Refineries Ltd (KPRL) facility at Changamwe, Mombasa, which was transformed into a storage terminal in 2014 after ceasing refining operations.
short-term solution
with a lengthy wait before Uganda can start refining its own crude, efforts have been made to facilitate cheaper and more efficient fuel imports.
This week, the firm developing a fuel stor- age and transport system in Uganda said that the project was around 70% complete ahead of operational start-up next year.
The facility, which is referred to as the Entebbe Jetty, is being built in Bugiri-Bukasa on the outskirts of Kampala and on the banks of Lake Victoria. It will allow for fuel to be trans- ported by barge across the lake from Kenya’s port of Kisumu rather than by truck, so reducing the “cost of fuel and its transportation by over 50%”, according to Captain Mike Mukula, chairman of engineering, procurement and construction (EPC) contractor Mahathi Infra Uganda.
Mukula told local press that the tanks were complete, while the jetties and ships were near- ing completion. He added that the journey from Kisumu to Bugiri-Bukasa was estimated to take 16 hours.
Once complete, the facility’s 14 tanks will have a fuel storage capacity of 70mn litres of gas- oline, diesel, jet A-1 and kerosene.
The tie-up will ease traffic on the congested border crossing and will make use of the Kisumu Oil Jetty (KOJ), owned by Kenya Pipeline Co. (KPC).
The project was unveiled in March, when KPC’s acting managing director Hudson
Andambi said: “we plan to use KOJ to export oil
to our neighbours. The jetty is technically sound Kisumu Oil Jetty and we are now consulting with Uganda on how
the two jetties will be operated in harmony.”
He added that dry testing of KOJ had been completed during the construction phase and a test run of facility would be carried out once a vessel for ferrying fuel had been made available by Mahathi.
In May 2017, KPC awarded a $170mn deal to Southern Engineering Co. (SECO) to construct the KOJ to facilitate export of fuel to Uganda and northern Tanzania, a deal which has since come under intense scrutiny along with several other KPC projects.
The Entebbe Jetty is being developed at a total cost of around $270mn and is expected to deliver fuel to Rwanda, Burundi, Uganda, northern Tanzania and eastern Congo (Brazzaville).
similar story
while home to significant gas reserves, Mozam- bique is yet to build out its downstream sector. Over the past few years, there has been talk of developing a 350,000 bpd oil refinery by Oilmoz in collaboration with China National Petroleum Corp. (CNPC), though a project of such scale was never likely to be realised.
However, as the country’s LNG industry begins to grow legs, use of gas as a feedstock for fuels and other products is a far more viable solution.
Indeed, Portugal’s Galp Energia announced plans this week to invest $138.7mn in logistics to expand its fuel storage capacity in Mozambique.
Paulo Varela, Galp’s administrator in
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w w w . N E W S B A S E . c o m Week 35 05•September•2019