02 Anibor Kragha Balancing Energy Security and Energy Transition For The African Downstram - 130323 - V2

Balancing Energy Transition
and Energy Security for the

African Downstream
African Refiners & Distributors Association

‫جمعية المكررين والمسوقين األفارقة‬
Association des Raffineurs & des
Distributeurs Africains
Anibor Kragha
ARDA Executive Secretary
The voice of african downstream oil
La voix de l'aval pétrolier africain
‫صوت مصب النفط األفريقي‬
2023 ARDA Week Conference

Cape Town, South Africa
March 13th, 2023
The voice of African downstream oil

1 ‫صوت مصب النفط األفريقي‬
Table of Contents
1. Introduction to the ARA / ARDA
2. Case for Action
3. Energy Transition and Energy Security
4. African Downstream Energy Transition Roadmap

Introduction to ARA / ARDA
• ARA = African Refiners and Distributors

Association (www.afrra.org)
• Created in 2006; name changed in 2017 to
reflect complete supply chain
• Acronym and logo changed from “ARA” to
“ARDA” in October 2020
• Role of the ARDA:

➢ Give unified voice to African refiners and independent marketers,
distributors and regulators
➢ Promote exchange of experience and best practices amongst all stakeholders
➢ Champion efforts for investments across African Downstream supply chain
➢ Promote African Energy Security – Maximize processing of African
crude oil in African Refineries and transportation of cleaner fuels via
integrated African Storage & Distribution infrastructure across the continent
La voix de l'aval pétrolier africain Anibor Kragha – ARDA Executive Secretary
Africa’s Growing Petroleum Products Demand
must be met with Cleaner Fuels
African primary energy mix forecast* Africa clean products balance
Shortfall Demand Refinery Output
1,400
Bioenergy 250
1,200
36% Renewables
1,000 200
39%
Hydro
mn toe
43%
800 45% 150 121
mn mt
600 45% Nuclear 78
45%
20%
Coal 100 47 80
400 50%
16%
200 24% 25% 25% Gas 50
24% 23% 24%
21%
0 Oil
0
2000 2010 2018 2025 2030 2035 2040
Source: IEA AEO 2019 *based on IEA Current Policies Scenario 2010 2013 2016 2019 2022 2025 2028 2031 2034
African Cities by population – 2035

Alexandria
Cairo
• Fossil fuels demand and products imports
Dakar
Khartoum to grow over next two decades
Ouagadougou
89 Abuja Kano
Bamako
Ibadan
• Major urban population growth to result

Kumasi Port Harcourt Addis Ababa
Lagos Yaoundé
24 Douala Kampala
Kinshasa
Nairobi
Dar es Salaam
in increased pollution
Luanda
• Sustainable transition to cleaner fuels

Lusaka
Antananarivo
5+ million
6
Greater
Johannesburg
imperative to address public health issues
Cape Town
1+ million 10+ million

Africa’s Import needs for Transport Fuels remain high
Net imports of transport fuels in selected regions by 2030
Sub-Saharan North C&S Southeast European
Africa Africa America Asia Union
2 000
Thousand barrels per day
1 500
1 000
500
2019 2030 2019 2030 2019 2030 2019 2030 2019 2030
Gasoline Diesel Kerosene
Import requirements for transport fuels continue to grow in sub-

Saharan Africa, making the region the world’s largest importer
Source: IEA
ARDA WEEK 2023 – 13 to 17 March, 2023
Balancing Energy Transition and

Security for the African Downstream
Equilibrer la transition énergétique et

la sécurité pour l’Aval Africain
• VENUE: Century City Conference

Centre (CCCC), Cape Town, South
Africa
• Contact: info@afrra.org for more

information

ARDA WEEK 2023 – Agenda
NOTE:
• Conference holds
March 13 to 15
• ARDA AGM
(Members only)
holds March 16
• CITAC Workshops
hold March 16 & 17 CV
CV
Energy Transition and Energy Security –
Complementary or Contradictory?**
• Recent market volatilities and geopolitical issues have exposed vulnerabilities in
world’s energy mix – energy security, affordability and resilience of global supply
• Energy transition and energy security are important; must occur simultaneously
for both objectives to be achieved
• Energy security covers both uninterrupted access to energy and

securing energy supplies at an affordable price
• Russia-Ukraine conflict showed need for short-term interventions to address

energy crisis alongside mid- to long-term goals of energy transition
• Strategic trilemma facing energy industry in balancing both goals:

➢ Achieving decarbonization of existing operations
➢ Reinforcing energy supply security
➢ Ensuring price stability
SOURCE**: White & Case (Nov. 2022)
Unique Roadmap needed to ensure just,
sustainable energy transition for Africa
Regional Contributions to cumulative global CO2 emissions
North
America
(29%)
Asia
(29%)
European
Union
(33%)
Africa
(2.73%)
Source: Energy for Growth Hub (2021)
• Inclusive, equitable energy transition roadmap must be deployed that captures
priorities, challenges and perspectives of Africa’s low-emitting countries
• Roadmap must not prioritize near-term emissions reductions (with relatively little
climate benefits) over support for economic development & energy transformation
Africa suffers from modest utilisation, with a
few bright spots, compared to other regions
Source: VITOL

Future Refineries must maximize Value
Addition via lower Carbon Footprint
Crude Processing: Fuels to Petrochemicals Customer Needs
FUELS • Maximum transportation fuels

Today
(gasoline, diesel, and jet)

PETROCHEMICALS
CRUDE
Industry Transformation
Refinery • Opportunistic petrochemicals

PCHEM FEEDSTOCK Petrochemical
Complex
• More stringent fuel specifications

•
Developing
FUELS Less diesel, more jet fuel

• Product flexibility to meet market needs
CRUDE
PETROCHEMICALS • More petrochemicals: ideally at
75% olefins, 25% aromatics
Refining & Petrochemical Complex • Lower environmental footprint
• Higher capital efficiency
• Zero-fuels
Long Term
• Direct to petrochemicals through

CRUDE PETROCHEMICALS alternative routes
• Lower environmental footprint
Petrochemical Complex
• High capital efficiency
Source: Honeywell-UOP
Coordinated Storage and Distribution Investments
required to deliver Energy Transition Plans
SSA Supply Routes
• Storage investments will be guided by:
➢ Refining outlook per country
➢ Existing capacity; hinterland supply routes
• Must invest in regional, pan-African oil

and product pipelines
➢ 6 countries with crude oil pipelines only
Source: CITAC ➢ 8 countries with products pipelines only
➢ 6 countries with both
• Deepwater ports in Africa will reduce

congestion and shipping costs
➢ Limitations
Source: CITAC in port infrastructure increase
Crude and product pipelines congestion; increase fuel costs
Crude oil pipelines
➢ Minimum port draft of 14 meters can save
Petroleum product pipelines
US$ 15 per metric ton of imported product

Africa Energy Transition – Plans for Cleaner Fuels,
Power and Renewables must be treated differently
TRANSPORT AND NEW ENERGIES FOR
POWER
COOKING FUELS TRANSPORT
• Refinery Upgrades • Focus on natural gas

to produce cleaner • Local production,
& renewables as
fuels and imports, blending and
near-term, cleaner
Petrochemical refining of biofuels
primary energy
Projects source(s) for Africa,
• Ammonia and replacing coal & oil
• Initiative(s) to
replace biomass with Hydrogen for land and
marine use • Power transmission
LPG as cooking fuel
upgrades
• Storage and
Distribution (S&D) • Sustainable Aviation • Support domestic &
infrastructure Fuels (SAF) industry demand
investments before EVs
Government policies and public financing critical for success

Current technologies can address most of the oil
and gas industry emissions
Source: VITOL
Opportunities for Refinery Decarbonization Projects
Process/energy Low carbon Carbon capture

efficiency Renewable power Hydrogen economy Circular economy utilization and
feedstocks storage
Scope 1 Scope 2 Scope 1 & 3 Scope 3 Scope 3 Scope 1,2&3

Operate in yield/energy Renewable power Green or blue hydrogen Renewable fuels and low Integration of chemical Match sources of CO2
efficient manner, provides a proven projects enable fuel carbon products recycling of plastics and against sinks; integration
electrification of drivers technology solution plus switching to take place other waste feedstocks within industrial hubs
integral part of H2 and support low carbon within the refinery /
Monitor,
economy feedstocks petrochemical / polymer
report and act
supply chain
underpinned by understanding of regional energy policy/regulations, digitalization advances, monitoring and

reporting, appreciation and access to technology innovation and funding, supporting organizational
governance plus realistic business case development (CAPEX & OPEX)
Net
Zero
Today
Efficiency Improvements Supply Chain / Circular Pathways

Scope 1 Scope 2 Scope 3
Source: Advisian
NOTE: For Illustration Purposes Only
African Energy Transition – A Tale of Three Decades
Improving Technological Innovation

Renewables
(Biofuels, SAF,
Solar, Wind)
Gas-to-Power /
Infrastructure
• Power Upgrades
Investment ($)
Infrastructure
• Mature Renewables
Technology LPG for Clean
(Offshore wind, Cooking
CCUS, etc.)
• LPG for Clean • Proven New
Cooking Energies Refinery
• Regional S&D (ammonia, Upgrades for
Infrastructure hydrogen, SAF) Clean Fuels, S&D
• Biofuels Infrastructure,
• Gas-to-Power Petrochemical
• Cleaner Fuels and • Solar & wind Projects
Petrochemical Projects
2020 2030 2040 2050
Carbon Mitigation Strategies are key for long-term
Refining Sustainability and for securing Financing
• Refineries play central role in
global emissions as emitters of
CO2 and suppliers of fossil fuels.
• Regulation will increasingly affect

profitability of refining companies
in selected regions, and impact
long-term demand patterns.
• Top performers in refining sector

mitigate downside risks through
internal-abatement efforts and
new value creation opportunities
• ARDA and SIR Refinery

kicked-off Phase 1 of Carbon
Source: VITOL
Abatement Project on June 21
ARDA Fund for Refinery Upgrades for Clean Fuels,
S&D Infrastructure and Petrochemicals Projects
COST ESTIMATE
REGION
(+/- 50%)
North Africa US$ 5.955 Billion
West & Central
US$ 6.285 Billion
Africa
AFRI 6
AFRI 5
East & Southern US$ 3.415 Billion
AFRI 4
AFRI 3
Africa
AFRI 2
AFRI 1
GRAND TOTAL US$15.655 Billion

Sub AFRI 1
Conflicting/missing
data
Source: CITAC – Cost Estimates for Refineries to produce AFRI-6
ARDA FUND FOR BANKABLE AFRICAN DOWNSTREAM PROJECTS

1. ARDA-endorsed African Refinery projects that deliver cleaner fuels and reduce
carbon emissions while reducing petroleum products imports
2. Strategic Storage & Distribution infrastructure investments across Africa
3. Petrochemical Projects for value addition and reducing carbon footprint
Dedicated Africa LPG Sector Development Fund
Africa LPG per capita consumption (2021)
Background
• ARDA, GLPGP and Standard Bank proposed
Fund in 2Q 2021 to deploy financing for rapid
scale up of clean cooking with LPG in SSA
• Fund to provide critical mass of technical
advice and financing for qualified countries < 2kg
2 – 5kg
via national LPG sector ecosystems

5 – 10kg
10 – 20kg
20 – 40kg
> 40kg
Current Status
• Gas now viewed as essential transition fuel SSA LPG demand by region
• IFC awarded GLPGP multi-country study to 5,000 West Central East Southern
assess enabling environment for LPG projects 4,000
• ARDA/GLPGP re-engaging on Fund for 3,000
execution of LPG and BioLPG projects 2,000
1,000
Next Step 0
• Engage DFIs to support LPG Sector Fund Source: CITAC

Key Takeaways
• Energy transition and energy security are both important; must be

pursued simultaneously for both objectives to be achieved
• Africa’s growing energy demands must be met with cleaner fuels to address
pollution and public health issues
• Separate implementation strategies needed for cleaner fuels, lower-carbon

power generation and sustainable renewable energy solutions in Africa
• Measured, decade-by-decade Sustainable Finance Plan required to ensure

investments are made to deliver unique African Energy Transition Plan(s)
➢ Coordinated refinery upgrade and S&D infrastructure projects are critical
• ARDA committed to securing project financing for strategic opportunities

in African Downstream oil sector
➢ Funds for Refinery Upgrades for Clean Fuels, Storage & Distribution
Infrastructure & Petrochemicals and LPG Sector Development
Thank You for your Attention


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Balancing Energy Transition

and Energy Security for the

African Refiners & Distributors Association

2023 ARDA Week Conference

The voice of African downstream oil

1. Introduction to the ARA / ARDA

2. Case for Action

3. Energy Transition and Energy Security

4. African Downstream Energy Transition Roadmap

The voice of African downstream oil

• ARA = African Refiners and Distributors

• Role of the ARDA:

African Cities by population – 2035

• Major urban population growth to result

• Sustainable transition to cleaner fuels

The voice of African downstream oil

Import requirements for transport fuels continue to grow in sub-

Balancing Energy Transition and

Equilibrer la transition énergétique et

• VENUE: Century City Conference

• Contact: info@afrra.org for more

The voice of African downstream oil

• Energy security covers both uninterrupted access to energy and

• Russia-Ukraine conflict showed need for short-term interventions to address

• Strategic trilemma facing energy industry in balancing both goals:

The voice of African downstream oil

FUELS • Maximum transportation fuels

(gasoline, diesel, and jet)

Refinery • Opportunistic petrochemicals

• More stringent fuel specifications

FUELS Less diesel, more jet fuel

• Direct to petrochemicals through

• Must invest in regional, pan-African oil

• Deepwater ports in Africa will reduce

The voice of African downstream oil

• Refinery Upgrades • Focus on natural gas

Government policies and public financing critical for success

Process/energy Low carbon Carbon capture

Scope 1 Scope 2 Scope 1 & 3 Scope 3 Scope 3 Scope 1,2&3

underpinned by understanding of regional energy policy/regulations, digitalization advances, monitoring and

Efficiency Improvements Supply Chain / Circular Pathways

African Energy Transition – A Tale of Three Decades

Improving Technological Innovation

• Regulation will increasingly affect

• Top performers in refining sector

• ARDA and SIR Refinery

GRAND TOTAL US$15.655 Billion

Source: CITAC – Cost Estimates for Refineries to produce AFRI-6

ARDA FUND FOR BANKABLE AFRICAN DOWNSTREAM PROJECTS

via national LPG sector ecosystems

assess enabling environment for LPG projects 4,000

• ARDA/GLPGP re-engaging on Fund for 3,000

execution of LPG and BioLPG projects 2,000

• Engage DFIs to support LPG Sector Fund Source: CITAC

• Energy transition and energy security are both important; must be

• Separate implementation strategies needed for cleaner fuels, lower-carbon

• Measured, decade-by-decade Sustainable Finance Plan required to ensure

• ARDA committed to securing project financing for strategic opportunities

The voice of African downstream oil

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