Market Trends of Africa Refined Petroleum Products Industry
This section covers the major market trends shaping the Africa Refined Petroleum Products Market according to our research experts:
The Middle Distillates is Expected to Dominate the Market
- Middle distillate refers to refined oil products comprising jet fuel, gasoil, diesel, marine bunker gasoil, and kerosene. In the last couple of years, there has been a rise in demand for these products.
- Increased number of automobile sales in the region is rising with high growth. For instance, the automotive sales in Nigeria were 10,443 in 2021. The country reports a 35.7% increase compared to 2020 as the sales were 7,451.
- Furthermore, African countries founded trade-free areas in 2018, and it was commissioned on 1st January 2021. It is called the African Continental Free Trade Area (AfCFTA). It was created by 54 of the 55 African nations. The AfCFTA is expected to promote trade between African countries and the world. A significant amount of trade in African countries is made by marine transportation, which is expected to boost the demand for marine fuel in the region.
- The FDI in oil & gas has increased due to discoveries in the oil & gas field. According to the Petroleum Authority of Uganda, in the first phase of the oil & gas development program, the country has received USD 3.5 billion FDI to explore and develop discovered oil and gas fields. Moreover, the government is planning for an additional investment of USD 9 billion in oil field development. Furthermore, in the second phase, the government intends to develop a crude oil refinery at Kabaale, and the total investment is expected to be around USD 4 billion.
- Off-late Africa witnessed a significant rise in rural-urban migration across the region. It resulted in higher demand for electricity in urban areas. For instance, in 2021, the energy demand in Africa increased by around 3%, which is the highest among all continents. This migration and electricity demand trend is expected to increase during the forecast period.
- All these factors are anticipated to boost the demand for refined petroleum products in the African market.
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Nigeria to Dominate the Market
- Africa is witnessing a rise in investment in the oil & gas industry. The region has oil reserves of around 125.1 thousand million barrels and natural gas reserves of about 12.9 trillion cubic meters. The region is expected to receive more than USD 25 billion in investment in the oil & gas industry.
- Nigeria is one of the leading countries in Africa in terms of oil & natural gas production. In 2010, natural gas production in Nigeria was 30.9 billion cubic meters, and in 2021 it reached 49.4 billion cubic meters. Furthermore, Nigeria has the highest natural gas reserve in the African region, with 5.5 trillion cubic meters.
- The oil & gas industry is critical to Nigeria's economy. The oil & gas industry alone accounts for 40 percent of the country's GDP, 70 percent of budget revenues, and 95 percent of foreign exchange earnings. Thus, the government plans to invest USD 2.76 billion and USD 1.5 billion in the Dangote refinery and Warri, Kaduna refineries.
- According to The Organisation of Petroleum Exporting Countries (OPEC) world would need more than USD 1.5 trillion in investment in the downstream sector of the oil and gas industry to cater to the demand by the end of 2045. Furthermore, OPEC also added USD 450 billion is expected to a developing country such as Nigeria.
- In January 2022, the Dangote refinery based in Lagos, Nigeria, started its test run before initiating the full production. The refinery is considered the biggest refinery in the African region. At full production, the refinery will have an annual capacity of 10.4 million tonnes of gasoline, 4.6 million tons of diesel, and 4 million tons of jet fuel. It will also produce 0.69 million tons of polypropylene, 0.24 million tons of propane, 32,000 tons of sulfur, and 0.5 million tons of carbon black feed.
- Due to these activities, the refined petroleum products market in Nigeria is expected to grow with higher CARG during the forecast period.
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