Oil, gas and petrochemicals: Sub Saharan Africa

Congo

BMI believe that overall upstream reserves will drop 6% this year, and languishing mid stream refinery infrastructure investment will very likely drive Congo-Brazzaville into becoming a net importer of refined products. BMI also say that a previously announced parcel round, set for this year, may provide further insight into the country’s petroleum trajectory. As the country struggles with a steady decline in production and a lag of new replacement projects in the near term, the government is sending strong signals that it realises measures have to be taken to reverse the trend by modernising the regulatory system, cooperating with its neighbour Angola and standing firm on its commitment to what could be the first bitumen oilsands development in Africa.

When it comes to the downstream sector, BMI have said that the country may be finding more crude but it is falling into a net importer of refined petroleum products. Despite its relatively modest consumption, demand is now rising at 10% /y and BMI forecast near double digit rises each year for most of the remainder of the decade. But the country’s only refinery is now unable to meet all domestic demand. The CORAF refinery at Pointe Noire has a nominal capacity of 21 000 bpd, but a utilisation rate of 65%. This year, BMI expect domestic consumption to overtake internal capacity by approximately 1000 bpd.

Equatorial Guinea

Since having peaked in 2005 at 375 477 bpd, oil production in the country has failed to demonstrate strong enough recovery to permanently return to growth. While output fell to 297 000 bpd in 2013, volumes have since managed notable gains on the back f the stare of smaller fields offshore. BMI estimate production averaged 346 00 bpd for 2013 and will continue to make incremental gains before peaking at 375 000 bpd in 2015.

Gas production in the country has been gradually decreasing after peaking in 2011 and reached an estimated 6.5 billion m³ last year. BMI forecast the production to decline further to 2017 hitting 6.2 billion m³. The dropping production levels are related to falling output from associated gas fields. However, a number of small liquids rich discoveries are due to come online and associated gas from these developments is largely destined for reinjection at the well site rather than for use to supply domestic or export markets.

The development of the 22 000 bpd Mbini refinery was set for final investment decisions at the end of 2012. However, no news of the projects final fate has been announced. The government has however, approached Sinopec to participate in the construction of the facility.

South Africa

BMI have said that the South African petrochemicals industry is struggling with poor domestic demand conditions, deteriorating risk and a volatile exchange rate. Margins are under pressure with the depreciation of the rand doing nothing to boost the industry’s fortunes on external markets. Sasol is now increasing investments in North America to take advantage of shale gas growth with only incremental increases in domestic capacities.

There was a declining trend in output throughout last year, suggesting the weaker domestic market was having a deleterious effect on the sector. However, synthetic rubber production showed a broadly favourable trend. BMI has estimated that last year, basic chemicals output fell 11.6% year on year and plastic output declined 21%, but rubber grew by 11.3% with a strong performance in the fourth quarter.

As South Africa’s economy is deteriorating, BMI expect relatively weak real GDP growth in South Africa over the medium term and have revised down their economic forecast expansion. This year, real GDP growth of 2.2% is expected. The project is predicated on the Chinese economic slowdown, the troubled domestic mining industry and rising interest rates which will impact the consumer. While this may depress growth in petrochemicals products used in the retail sector, in particular packaging, this will be outweighed by stronger growth in some industrial segments.

Sudan and South Sudan

The escalation of violence in South Sudan has led to severe disruptions to the country’s oil output. The fighting has derailed the country’s fragile production recovery, adding further downward pressure to its bearish long term production outlook.

In 2013, BMI estimate that production averaged 253 000 bpd for both Sudan and South Sudan. In light of the current conflict, BMI has forecast output for this year at 240 000 bpd and recovery is expected in 2015 with output hitting its peak in 2017 at 417 000 bpd. Production is then expected to decline to 2023 and hit 366 000 bpd.

An announcement in September last year that Sudan would get rid of its popular fuel subsidies sparked widespread protest. Nevertheless, in the light of the country’s weakening fiscal position the government drove through the subsidy reforms. This is reflected in the fact that BMI believes there will be lower oil product consumption growth. Further downsides stem from the conflict, which BMI expect to result in lower demand for crude and fuel products.

Adapted for web by Claira Lloyd

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