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* Sees gasoil demand close to double-digit growth
* African fuel market worth $440 mln a day
* Vitol "talking and looking" at Nigerian oil assets
By Emma Farge and Ron Bousso
DAKAR/LONDON, April 10 Africa's dependency on
fuel imports is likely to grow as its refining projects struggle
to get off the ground, a Vitol director told a Reuters Africa
Dozens of new refining projects have been announced in
Africa, but they are unlikely to be built unless they are either
gigantic or with guaranteed crude supply in a landlocked
"Micro refineries in waterborne locations are not a viable
way to get a return on capital. You have to go big, and today
big means a 300,000 to 500,000 barrel per day complex refinery
and $5-$15 billion of capital," Chris Bake, director of
origination and investments, told Reuters in a telephone
"To deploy that is challenging," he added.
Bake added that he expected one large refinery to be built
in West Africa but that it could take five to seven years, while
new plants in east Africa were less certain given strong
competition from the Middle East.
Vitol, the world's top oil trader with over $300
billion in annual revenues, seeks to meet African demand in
competition with other traders such as Glencore and
Trafigura and with large Asian refiners.
Vitol estimates that Africa's fuel demand amounts to 3.71
million barrels per day in 2014, worth about $440 million a day,
based on ICE gasoil futures prices. That is close to a 3
percent increase from the 2013 estimate.
Bake said the most exciting market in Africa was gasoil,
with growth expected to be in the high single digits as power
demand booms. Demand for liquefied petroleum gas will also rise
quickly across North Africa and Nigeria as consumers spend more
and move to cities, he added.
A small number of refining projects in landlocked locations
could succeed, possibly in Uganda, Chad or South Sudan, Bake
added, as they are sheltered from competing supplies of giant
Vitol is leading a consortium to bid for a $2.5 billion
refinery in Uganda. The winner is expected to be announced in
NIGERIA, SOUTH SUDAN
Vitol will also seek to supply African countries with gas
for power production and is already working to develop gas
fields offshore Ghana to supply its local market.
"Africa is a power-hungry continent, and we are looking at
domestic gas opportunities," said Chris Joly, director of
exploration and production, in the same interview.
He added that the firm, which pumps around 10,000 barrels
per day, would look for exploration and production opportunities
that complement its existing assets and trading contracts.
Vitol has invested in an African chain of petrol service
stations, Vivo Energy, in partnership with Shell and
Helios Investments Partners. Vitol also has an oil product
storage terminal in Mombasa, Kenya.
"We're not doing upstream for the sake of doing upstream.
It's more about integration with the wider Vitol business," Joly
Unlike traders Glencore and Mercuria, Vitol has
held off bidding for Shell's assets in Nigeria, Africa's top oil
producer, citing high entry costs and stiff competition from
local players, who have access to low borrowing rates.
But Joly said Vitol would keep looking at opportunities.
"Nigeria's too important to ignore, so we are taking a
cautious and long-term view. There will be opportunities down
the road. We are talking and looking," he said.
Vitol, a regular buyer of South Sudan's Dar grade crude, is
also in talks with the government there on oil infrastructure
projects, Bake said, without giving details.
"Like others, we've talked to the government about ways to
help improve the infrastructure to give them incremental
security of supply. We're still working on options with them."
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(Additional reporting by Dmitry Zhdannikov; editing by Jane