2. 1 By Jamal M Ba-Amer SAMIR Deputy General Manager of Development The Future of Africa’s Refining in a Liberalized Economy By Jamal M Ba-Amer SAMIR Deputy General Manager of Development NOT AN OFFICIAL UNCTAD RECORD

3. 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

4. 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

5. 4 Africa is a very low weight player 4% of world capacity 3% of world demand

6. 5 Does every country need a refinery? Egypt Algeria Libya 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 Morocco is the largest net ‘Energy importer’ in Africa Size to be internationally competitive

7. 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

8. 7 North-Africa Refining Capacity Competitive CIF Refinery Competitive FOB Refinery Export Refineries 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 Viability of the industry is a strategic issue mainly for Morocco MOH SK

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

10. 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

11. 10 West-Africa Refining Capacity Nigeria is key to the region… 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. Nigerian Refineries Abidjan

12. 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

13. 12 Does this capacity meet oil demand? Morocco has the least oil production and needs to maintain competitive its only internationally-sized refinery

14. 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

15. 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

16. 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

17. 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

18. REFORMING 1 REFORMING 2 NAPHTA+GAZ KERO HDS GASOIL HDS COMPLEXE HUILES DSV ESSENCES GASOIL FUEL OIL Fuel gas GPL Jet/Kero Huiles de base Bitumes C4C4 Fuel gas Essence légère Reformat LPG Essence lourde Unité H 2 HYDRO CRACKER DSV VIS BREAKER H 2 riche gas Naphtha Gas oïl Residue Fuel gas Gas oïl KERO MEROX H2H2 8250 2600 1700 68 207 130 Naphtha en Kt/A Nouvelles unités 1400 561 3 2 1 DISTILLATION 2500 Sulfure Unit 100 230 810 430 420 3925 1410 150 AMINE Demin Water 200M3/h S W S SAMIR Upgrade Project Configuration

19. 18 Thank you for your kind Attention