The Organisation of Petroleum Exporting Countries (OPEC), has estimated that the world of oil refineries shall experience refining capacity additions between 2020 and 2025 at around 5.2 million barrels per day based on the review of announced and planned refinery projects in its newly released 2020 World Oil Outlook.
The world oil body said that new refining capacities of reckon expected to come on stream in countries like Nigeria, where Dangote Refinery is expected on stream anytime, and other African countries in the next few years may increase pressure on existing plants on the continent.
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“Significant capacity additions are also expected in Africa in the medium-term period. Additions of new refining capacity are clearly in line with oil demand growth expectations, which show positive trends in most developing countries,” OPEC said, adding that the additions expected in Africa total around 0.8 million bpd or 15% of the global volume.
“The largest project expected to come online is the Dangote refinery in Nigeria in 2022, as well as several smaller projects in Egypt and Algeria. This significant increase in refining capacity is somewhat larger than incremental demand in the medium-term and could help to reduce product imports, especially in West Africa,” it said.
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OPEC noted that while in Latin America and in the African continent, there are pockets of old and inefficient refineries that have relatively low utilisation rates, “the new refining capacities, which are projected to come online in the medium to long-term, may increase pressure on these existing plants with two ways out – either closure or refurbishment.
“Both markets are expected to grow considerably, which would support refurbishment of older plants. However, due to the lack of financing and rising internal competition, some of these plants may be closed in the coming years,” OPEC said.
The world oil body noted that the crisis caused by the outbreak of COVID-19 might lead to delays of some projects in this outlook, thus shifting commissioning dates from the first period towards the second half of the medium-term.
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“Furthermore, the uncertainty is even higher for projects in the second half of the medium-term period. Consequently, it is possible that some projects expected to go online in the medium-term period may become operational only after 2025,” it added.
OPEC further projected that start-up of new refining capacity in Africa in the medium term could reduce exports from Europe to the continent. Africa is projected to add 2.9 million bpd of distillation capacity by 2045.
By Chibisi Ohakah, Abuja