Puma Energy’s Africa head calls for urgent development of energy infrastructure on the continent

10th May 2024

By: Irma Venter

Creamer Media Senior Deputy Editor


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Puma Energy Africa head Fadi Mitri has issued a call to action to the African Refiners and Distributors Association (ARDA) to urgently develop the continent’s energy infrastructure.

ARDA is the pan-African organisation for the downstream oil sector.

Speaking at an ARDA conference, held in Cape Town in April, Mitri said oil- and fuel-related storage, port and transport infrastructure was lacking in Africa.

In contrast to this, the need for energy in Africa is set to grow exponentially along with a rapidly urbanising population. In fact, Africa is expected to add 1.3-billion people to its population by 2050.

“It is the responsibility of those present here that communities get access to energy at a competitive price, so that they can compete in the world economy and achieve economic prosperity,” said Mitri.

He added that research by Puma Energy and oil-based research house and consultancy CITAC had shown that hydrocarbon fuel demand in Africa would grow by 56% by 2040.

“This is across the main fuels market. But how do we supply consumers with today’s infrastructure?”

Mitri highlighted that 59% of ports in Africa had draught restrictions of less than 10 m, which meant that they were too shallow to allow large-scale vessels to weigh anchor.

This also meant that African countries and consumers paid more for fuel than those countries able to allow for the economies of scale of large deliveries.

“If you want your fuel delivered in small parcels, it will be more expensive,” said Mitri.

Congestion also had an economic cost, he noted.

“If a supplier knows that he’ll have to wait five or ten days longer than at any other port, he will charge you more. That cost will go to the consumer.”

Fuel storage infrastructure was equally important, said Mitri.

“Only 6% of our [African] coastal fuel storage facilities can be classified as world-class [in terms of size].”

Again, said Mitri, the added costs associated with this trickled down to consumers.

Research showed that sub-Saharan Africa alone required between $1.5-billion and $2- billion in investment in hydrocarbon fuel storage facilities by 2040 to handle increased import volumes.

Even more was needed for pipeline development.

Africa, on a square kilometre basis, had 20 times less product pipelines than the US, said Mitri.

“Every industrialised economy has a very tightly knit pipeline network backing it.”

Mitri noted that 83% of sub-Saharan Africa’s fuel demand was transported by road.

He said research showed that a collective investment of $9.3- billion was required to scale up existing pipelines and develop new pipeline routes in Africa.

“This could help reduce road fatalities and lower the cost of the importation of hydrocarbon fuels, and, therefore, support economic growth and prosperity and guarantee energy security.

“This is why I’m issuing a call to action to ARDA today. These projects will not grow from the soil on their own. They will need masterplans and coordination and prioritisation,” emphasised Mitri.

“ARDA should create a downstream infrastructure fund that can produce a masterplan for the various regions of the continent. That investment fund can then face the finance industry, traders and suppliers and you can ask who wants to participate in this fund.”

Vitol analyst Simon Warren noted at the ARDA conference that the energy and commodity trading company did not expect peak oil demand “at all” this decade.

“If you add up all the electric vehicles (EVs) sold globally over the last decade or so, they have substituted no more than half-a-million barrels a day of gasoline demand.

“All the EV push we’ve seen on a global basis has taken only 0.5% of total demand.”

Edited by Martin Zhuwakinyu
Creamer Media Senior Deputy Editor



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