In Hellenic Shipping News 26/05/2015
Tanker market owners are getting positive news all over the place these days, as demand for oil and products is erupting in all kinds of new and exciting markets, helping to offset losses in other, more traditional routes. At the same, a rather moderate fleet growth is boosting future prospects even further, in what could turn out to be one of the more sustainable growth period of the wet market’s history.
In a recent report, shipbroker and analyst Poten & Partners, noted that over the past five year, the refined product trades into sub-Saharan Africa have increased dramatically. Based on the outlook for product demand relative to projections for African refinery output, the outlook for the next five years is also quite promising, driven mostly by the traditional powerhouses of South Africa and Nigeria. “Given the port and terminal restrictions of most of the countries in Africa, MRs, Handys and smaller product tankers are the vessels of choice to distribute the product around the continent. However, larger vessels are also utilized, mostly for lightering purposes. For example, fully laden Panamax sized product tankers (LR1s) are regularly taken to Lagos (Nigeria) from where small 15 – 25,000 dwt tankers shuttle the product to other Nigerian ports like Warri and Port Harcourt”, said Poten.
It’s worth noting that the majority of the imported products into Africa are gasoline and diesel fuel. Western Africa imports its products from Europe and lately from the US. At the same time, East and South Africa prefer to import from the Middle East of India. However, South Africa, already has an extensive network of refineries, which already produce about two-thirds of the country’s annual needs.
In any case, the triggering factor behind all these African imports of gasoline and diesel fuel is the continent’s lack of refineries. Poten said that “refining capacity in Africa is very limited (around 2.2 million barrels per day) and has not changed much over the last 10 years. Most of the refineries in Africa are small (< 50,000 b/d), old and unsophisticated. They are in relatively poor condition due to years of under-investment and neglect and run at extremely low utilization rates. Some refinery expansions and new capacity is planned, but little is expected to come on stream within the next five years”.
For instance, Poten noted that Uganda, Angola and Nigeria are all expecting to have a total of three new refineries (one for each country) in the coming future, with Uganda’s one, primed to be the country’s first ever installation of this type. It will be built by a Russian firm and will process 60,000 bpd. Angola’s refinery, which is being constructed since 2012, is bound to be double that size, but will take until 2017/2018 to be completed and operational. Nigeria’s facility will be the biggest with a projected 400,000 bpd.
Demand-wise, the IEA forecasts that product demand in Africa will increase by a 3.3% per annum from 2014 through 2020 and so will its import requirements. This rise will be driven mainly by population growth. Total net product imports could rise to more than 2.0 million barrels per day before the end of the decade. “Steady growth in African product imports will continue to provide support to the medium and long range product tanker segments”, Poten concluded.
