Page 13 - AfrOil Week 02 2021

AfrOil PERFORMANCE AfrOil

“It is estimated that this lower price forecast will [the] start-up dates of their major projects are
cost Africa a potential $1 trillion in export rev- expected to be delayed by one to three years,
enues from oil over the next 20 years,” it stated. and smaller projects may be cancelled. Nigeria,
These financial challenges are already in play, Mozambique, Senegal, Kenya, Mauritania and
as evidenced by the fact that African oil export Uganda are faced with project and FID [final
revenues appear to have declined in 2020, PwC investment decision] deferrals, while two of
added. Total’s projects in Angola are facing outright
“Nigeria, Algeria, Angola, Libya and Egypt cancellation.”
could each be facing $20bn or more in lost These developments highlight the impor-
export revenue in 2020,” it said. tance of economic diversification for oil-pro-
The report went on to say that Africa had ducing countries, PwC commented. “This is
seen oil production sink to 8.3mn barrels per day particularly important for oil exporters with
(bpd) last year, down by about 10% on the 2019 a high degree of sector concentration,” it said.
figure. Likewise, oil export volumes dropped to “Even countries that are seen as highly resilient
4.2mn bpd, down by about 11% on the previ- should still consider how to benefit from the
ous year’s figure of 5.3mn bpd. At the same time, economy shift and the significant investment
Africa’s proven oil reserves amounted to 125.7bn stimulus being mobilised by the developed
barrels as of the end of 2020, steady on the end- world.” ™
2019 figure.
Some of the decline can be reversed through
the reactivation of production facilities that were
slowed or idled last year because of the pan-
demic. However, the extent of the reversal will
depend on global energy demand, which has not
yet recovered fully from the pandemic.
Additionally, African oil producers will
have a harder time compensating for the deple-
tion of existing reserves, since the stresses of
the past year have delayed a number of major
upstream projects. PwC stressed this point,
saying: “The 2020 COVID-19 disruption has,
however, reversed many of the sector gains and
seen project delays and cancellations. Many oil
and gas majors in Africa have announced that The stresses of the past year have delayed major upstream projects (Photo: Total)

Refinery closures set to increase

South Africa’s need for fuel imports

SOUTH AFRICA REFINERY closures are likely to make South last July, when it suffered an explosion and fire.
Africa more dependent on petroleum product These closures have compounded other
imports in the near term, according to Citac, a problems in South Africa’s downstream sector,
UK-based consultancy that monitors Africa’s Citac explained. The country’s other two refin-
downstream sector. eries are now under review, with Royal Dutch
Citac noted earlier this week that it antici- Shell (UK/Netherlands) taking another look
pated this shift because two of the country’s four at its holding in Sapref, a joint venture with BP
refineries are set to remain offline until 2022 at (UK) that operates a 180,000 bpd unit near Dur-
least. Together, these two plants account for 43% ban, and Sasol (South Africa) mulling the future
of South Africa’s total oil-processing capacity of of its Natref plant in Sasolburg.
500,000 barrels per day, it noted. At the same time, all four refineries are also
One of the plants in question is the Durban facing a rise in expenditures, owing to upcom-
refinery, a 120,000 bpd facility owned by Engen ing changes in emissions standards. At the same
Holdings, an affiliate of Malaysia’s Petronas. This time, they have also seen their finances suffer
unit suspended operations in December follow- because of the coronavirus (COVID-19) pan-
ing a fire. demic, which has constrained global demand
The other affected unit is a 100,000 bpd refin- for energy and fuels.
ery in Cape Town owned by Astron Energy, a Going forward, Citac noted, South Africa’s
unit of the Anglo-Swiss commodity trading downstream sector is likely to be under even
firm Glencore. It has been inoperational since more pressure.

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