Page 16 - DMEA Week 30 2022

DMEA NEWS IN BRIEF DMEA

industry. There has been no shortage of ideas meeting domestic consumption.”
Returning to the question of security of and policy proposals on strategic stocks in THE NATION
supply for internal combustion engines, there democratic South Africa. The shortage is of
are also advantages for the government in so cash to fund the ideas.
far as strategic stocks are concerned. Given South Africa’s increasingly PIPELINES
Since there are fewer oil refineries, less constrained finances, there seems to be
crude oil stocks are required. This may be a little prospect of security of supply being Nigeria, Algeria, Niger sign
good thing given the troubles associated with resolved soon. Security of supply may only
them. be improved when South Africa switches to MoU for $13bn Saharan gas
Firstly, there is the economic argument electric vehicles.
that strategic stocks sterilise large quantities of THE CONVERSATION pipeline
cash. In turn, this has a high opportunity cost
in South Africa with its many other pressing Algeria, Nigeria and Niger have signed a
social needs. PETROCHEMICALS Memorandum of Understanding (MoU) to
The Minister of Mineral Resources build a natural gas pipeline across the Sahara
and Energy told Parliament in 2022 that Dangote plant to position Desert, Algeria’s Energy Minister, Mohamed
the strategic oil stocks were valued at Arkab, announced yesterday.
R1,750,764,252. Nigeria as PP hub in Africa In a related development, ExxonMobil and
Secondly, there are governance issues. In Chevron yesterday smashed profit records in
2015 the Strategic Fuel Fund illegally sold 10.3 Dangote’s $2 billion Petrochemical Plant Q2 as the surging energy prices that followed
million barrels (the entire stock) at bargain located at Ibeju-Lekki, Lagos State, when the war delivered a windfall for the oil
basement prices to oil traders. In 2020 the fully operational will position Nigeria as one supermajors.
High Court returned the stocks to the fuel of Africa’s largest petrochemicals hubs and The three countries had agreed in June to
fund. boost non-oil export earnings for the country, revive decades-old talks over the project, a
The closure of oil refineries has according to the Dangote Group President, potential opportunity for Europe to diversify
inadvertently provided a windfall for fuel Aliko Dangote. its gas sources.
users - it has allowed government to sell off The 900,000 metric tonnes per annum Arkab told reporters after the signing
some of the stocks and use the proceeds to capacity Plant, which is being built ceremony that the three countries would
subsidise fuel prices during an oil price spike. alongside the 650,000 barrels per day continue talks to achieve the project as quickly
These subsidies are to be partially funded Dangote Petroleum Refinery will produce as possible.
by the sale of strategic oil stocks to the value polypropylene strategically positioned to The Trans-Saharan gas pipeline is an
of R6 billion. By my estimates this represents cater to the demands of the growing plastic estimated $13 billion project that could send
approximately half of the strategic stocks, processing downstream industries; not only in up to 30 billion cubic metres a year of supplies
which leaves a bit more than the surviving Africa but also in other parts of the world. to Europe.
refineries need. Dangote who made this disclosure at 2022 The pipeline is expected to span around
A much better solution would be to hold Zenith Bank International Trade Seminar 4,000 kilometres and has been slated to start
strategic stocks of refined products in the on Non-oil Export recently in Lagos, said in Warri, Nigeria, and to end in Hassi R’Mel,
inland market, which is approximately 60% of the refinery and petrochemical projects will Algeria, where it would connect to existing
the South African market. ensure petroleum products sufficiency and pipelines that run to Europe.
Although discussed in government at security for Nigeria. The idea was first proposed more than 40
least 20 years ago, this option has not been He emphasised the need for government to years ago and an agreement signed between
pursued. unlock the potential of petrochemical export the countries in 2009, but progress had stalled,
Does the closure of the refineries affect by completing the OB3 pipeline to make gas a Reuters report stated.
South Africa’s security of supply? Not much. available to manufacturers. Algeria exported 54 billion cubic meters of
The country has merely swapped reliance “There is need to prioritise financing gas gas in 2021, mainly to Italy and Spain.
on crude oil imports for refined product infrastructure, gas allocation to the domestic The MoU was signed in Algiers by the
imports. Rather than international supply market and adjustment of fiscal framework Algerian Minister of Energy and Mines,
risks, the bigger risks seem to be domestic. to make supply of gas to domestic market Arkab; Nigerian Minister of State for
So what is the government’s policy on the attractive for oil companies,” he added. Petroleum Resources, Timipre Sylva, and
security of supply? Dangote disclosed that the refinery Niger Minister of Energy and Renewables,
The 1998 White Paper on Energy Policy reputed to be the largest single train greenfield Mahamane Mahamadou.
said that the government would maintain petroleum refinery in the world is at an In 2009, an accord was signed by Nigeria,
three months of oil supplies. But there has advanced stage of completion, and that on Niger, and Algeria to build the Trans
never been a budget allocation to allow the completion, it is expected to export more than Saharan gas pipeline project which was to be
country to reach this level. 8 million tons of Petroleum products annually completed in 2015. But for various reasons,
In 2012 government gazetted a draft plan after meeting domestic consumption, while including growing security concerns, the
proposing that its holdings be reduced to 60 about 900,000 tons of polypropylene is also project was stopped temporarily.
days, supplemented by the industry holding expected from the petrochemical plant. The proposed pipeline will source natural
14 days of refined products. The business mogul revealed that the gas from Nigeria and traverse north through
The draft has never progressed to a final recently commissioned 3m mtpa Fertilizer Niger, and further to Algeria.
policy, probably due to financial constraints Plant has ‘commenced export to India, North The revival of the project is coming against
and the industry’s unwillingness to foot a part America and Latin America. At steady state, the backdrop of pressure from the European
of the bill. will export two million tons per annum after Union (EU) on African countries to ramp up

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