(For other news from Reuters Africa Summit, click here)
* NOC is Ethiopia's largest private marketer
* Says mega refinery would cut import costs
* Eyes expansion into neighbouring economies
* Tight state grip stifling companies growth
By Aaron Maasho
ADDIS ABABA, April 9 Ethiopia's leading private
oil marketer plans to expand into neighbouring east African
economies and is interested in part financing a refinery after
commercial discoveries in the region.
Tadesse Tilahun, CEO of National Oil Ethiopia, said untapped
crude deposits in Kenya and Uganda handed governments and
investors the opportunity to construct a refinery able to
compete with cheap imports from India, the Gulf and beyond.
Doing so would help African countries extract more value
from their resources and cut their import bills, Tadesse said.
"Africa's demand for refined products is growing hugely
because of its economic growth. The crude findings are also
increasing. That is the opportunity," Tadesse said in Addis
Ababa as part of the Reuters Africa Summit.
"We want to (build) a refinery. We have already discussed
this in principle with our shareholders, who are very much
National Oil's (NOC) shareholders include Saudi billionaire
Mohammed Hussein Al Amoudi, whose investment portfolio in
construction, gold, hotels and energy has helped amass an
estimated fortune of over $15 billion, according to Forbes.
Tadesse said other private and public investors would need
to come on board.
Eastern Uganda has become the latest frontier in the global
hydrocarbon hunt after gas finds off Tanzania and Mozambique and
oil discoveries in Uganda and Kenya.
Even so, Sub-Saharan Africa faces headwinds supplying more
of its own refined petroleum products. Regional cooperation and
funding for oil-related infrastructure are proving slow, while
foreign oil refiners and traders are flooding the $80 billion
market with imports.
Existing pipelines also tended to run to the coast, Tadesse
said, either for the export of crude or the import of refined
products from small-scale refineries found near ports.
"That has to change," Tadesse said. "Refineries are now
needed inland so that Africa can supply itself."
Tadesse acknowledged the price tag was problematic for many
African countries. Oil production in Uganda has been delayed in
part due to a row between the government and investors over the
size - and thus cost - of a refinery in the country.
"It would be in our own interest, for all countries in this
area, to have a common refinery, a joint facility, where we can
take our own product," Tadesse said.
Kenya plans - but has made little progress towards - a new
$2.8 billion refinery on its northern coast. Industry experts
say Ugandan and Kenyan oil exports could reach 500,000 barrels
per day - oil Tadesse would rather see stay in the region.
Founded in 2004, NOC now claims a 35 percent share of a
market tightly controlled by the Ethiopian state. So too are
other key sectors including banking, retail and telecoms, which
the government says need shielding from foreign investors while
the economy diversifies away from its agricultural base.
Tadesse said NOC had secured a license for fuel stations in
neighbouring Djibouti and targeted expanding its downstream
operations into Kenya within five years. Plans to enter South
Sudan have been shelved due to the four-month conflict there.
"We want to be a regional player," Tadesse said.
Oil consumption has doubled in 10 years in Ethiopia, one of
Sub-Saharan Africa's fastest-growing economies and now the
region's fifth-largest after leap-frogging Kenya.
Demand for oil in Ethiopia is seen tripling by 2025,
indicative of the economic transformation under way in Africa's
second-most populous nation which is still better known abroad
for the famine of 1984 and communist-era purges.
But the pace of NOC's expansion at home hinges on the
government relaxing its grip on the industry.
Tadesse said the government imported all fuel products and
set the market price, allowing fuel stations a margin of just 4
U.S. cents per litre. Land rights issues also hindered growth.
"In no way can that be attractive to investors," he said.
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(Writing by Richard Lough; Editing by Susan Fenton)