BMI has said that Algeria is focussing on low added value production and is relying on commodity chemicals that are very price responsive to fluctuations in the market and therefore easily undermined by capacity in other global locations. BMI has also commented that Algeria’s petrochemical sector is far from competing on an equal plane with Europe’s petrochemicals sector in the realms of product diversification. Due to this, it is expected that Algeria’s petrochemical market is going to be vulnerable to market fluctuations, however, BMI believes that the effect on margins will be cushioned by the domestic availability of competitively priced feedstocks.
BMI has forecast that there will be some improvement in Algeria’s petrochemicals sector through 2015 due to domestic market demand and investment activity. The growth in hydrocarbons and a large rise in polymer output are however not to be expected in the medium term. Also, BMI have pointed out that plans for the new Arzew petrochemicals complex have been shelved so the country is very unlikely to capitalise on gas reserves to generate downstream growth.
Due to worsening political and business environments, BMI has said that Nigeria’s hydrocarbon sector is continuing to struggle. Oil consumption is expected to increase from 311 000 bpd this year to approximately 400 000 bpd by 2023, which will be led by the transport sector. However, there is a threat to this as the government are looking to reign in fuel subsidies. BMI also expects Nigeria to struggle to find new markets for its crude oil, especially after being displaced from its traditional US market due to shale. The oversupply of light sweet crude and unfavourable refining margins are, in BMI’s opinion, going to stem demand for light sweet crude in key European and Asian markets.
When it comes to refining, despite the country having a large capacity, adverse consequences of fuel subsidies, poor maintenance and general operational failure have, resulted in refining utilisation staying at rates below 30% for the last 10 years. However, BMI has said that refined fuels production could increase from next year with the start of operations at the Escravos GTL plant, and the commencement of processing operations at the 400 000 bpd Dangote refinery in 2017. The Dangote refinery, could in fact see the country erase all of its net refined fuel imports by 2019.
Looking at gas, an expansion in the country’s LNG capacity by 2023 is apparently unlikely due to the unreliable supply and uncertain demand. If there is any additional gas production in the country, BMI anticipates it to all be consumed domestically.
Sudan and South Sudan
Production recovery has halted following further fighting in Sudan and South Sudan and BMI has said that due to ‘the fractured and volatile nature of the conflict and the heavy rebel presence in the oil producing states, we anticipate more lasting production outages.’ For 2013, BMI estimates an average production of 253 000 bpd for Sudan and South Sudan, however Q4 2013 output was significantly higher at 344 000 bpd. For this year, BMI did originally anticipate production to be 370 000 bpd, however due to current conflict this has been down graded to 240 000 bpd. A recovery is anticipated for next year with output hitting a peak in 2017 of 417 000 bpd. BMI does however expect production to slide following the 2017 peak to 366 000 bpd by 2023.
BMI has said that due to a resolution to the refinery dispute, the signing of a Memorandum of Understanding with oil companies and the award of CNC’s Kingfisher production license, Uganda is on the path to becoming an oil producer. BMI has said however that it does not forecast first oil from the country until 2020. This will most likely be due to a delay in infrastructure projects. Uganda has the fourth largest crude reserves in Africa, at 2.5 billion bbls and there is potential for this to expand as more exploration campaigns appear.
When it comes to the downstream sector, negotiations between IOCs and the government have been fruitful and there is now an agreement in place to build a 60 000 bpd refinery in the Hoima district. This plant will refine domestically produced crude following the commencement of production, which, as mentioned above, is anticipated for 2020. Consumption of refined fuels in the country is expected to pick up speed by the end of 2023 due to the increased levels of domestic production and the country is expected to become a net exporter of crude oil following the first production of domestic crude. Exports of 70 000 bpd are anticipated. Exports of refined fuels are however not likely to increase due to the rise in domestic consumption rates.
Yaang Pipe Industry