BREAKING: Afreximbank Earmarks $3 Billion to Boost Africa’s Refined Oil Product Supply
The African Export–Import Bank (Afreximbank), a key investor in oil and gas projects, has earmarked $3 billion to finance the purchase of refined products within Africa as part of broader plans to boost refining capacity, a senior executive told Reuters on Monday.
Africa exports around 80 per cent of its crude oil, and 45 per cent of the natural gas it produces, leaving the fast-growing continent heavily-reliant on imported refined products, according to the bank and analysts.
A lack of storage infrastructure and older refineries with relatively small output capacity characterise the energy landscape of sub-Saharan Africa.
“The time has come for Africa to take control of its energy destiny,” Executive Vice President, Kanayo Awani, at Afreximbank told an energy conference in Cape Town, South Africa, yesterday.
Awani said the $3 billion revolving intra-African oil importing financing initiative willbe used for products including premium motor spirit, automotive gas oil, heavy fuel oil, jet fuel, and kerosene, among others.
Afreximbank, which has invested in the 650,000 barrels per day Dangote refinery in Nigeria, and the Lobito and Cabinda refineries in Angola, has traditionally helped finance imports of refined products from outside the continent.
THISDAY recalls that Afreximbank is also playing a pivotal role in the establishment of the Africa Energy Bank (AEB), a new financial institution with an initial capitalisation of $5 billion, aimed at addressing funding challenges in Africa’s energy sector, particularly in oil and gas projects.
The bank is partnering with the African Petroleum Producers’ Organization (APPO), a group of 18 oil-exporting African nations, to bring the initiative to fruition, co-investing in the AEB and taking a lead role in advising on its management and implementation processes.
In all, Africa spends an estimated $30 billion in annual petroleum import costs due to inadequate refining capacity, Awani said. In Nigeria, for example, increased investments have helped create 1.3 million bpd of refining capacity, helping make the Gulf of Guinea a key refining hub for the continent.
“Our goal is to support 3 million barrels per day of refining capacity in the near to medium term, that is our ambition,” Awani told Reuters.
A joint report last year by energy consultancy CITAC and Puma Energy found that the demand for cleaner fuels was set to rise by 56 per cent from 2022 levels to reach 142 million metric tons by 2040.
Meanwhile, oil prices dropped to a near four-year low yesterday on worries U.S. President Donald Trump’s latest round of trade tariffs could push economies around the world into recession and reduce global demand for energy.
The session was marked by extreme volatility with prices in intraday trade down more than $3 a barrel overnight and up over $1 Monday morning following reports of what the White House called “fake news” that Trump was considering a 90-day pause on tariffs for all countries, except China.
Brent futures were down 79 cents, or 1.2 per cent, to $64.80 per barrel, while U.S. West Texas Intermediate (WTI) crude futures were down 75 cents, or 1.2 per cent, to $61.24. That put both benchmarks on track for their lowest closes since April 2021, a Reuters report said.
Trump’s sweeping tariff plans battered global markets after he said foreign governments would have to pay “a lot of money” to get the levies removed.
Also, Goldman Sachs has forecast a 45 per cent chance of recession in the U.S. over the next 12 months and made downward revisions to its oil price projections. In the same vein, Citi and Morgan Stanley also cut their Brent outlooks. JPMorgan said last week that it sees a 60 per cent probability of recession in the U.S. and globally.
Citi cut its Brent Crude forecast to $60 per barrel for the next three months on the back of last week’s tariff announcement by Trump.
Responding to Trump’s tariffs, China said that it would impose additional levies of 34 per cent on American goods, confirming investor fears that a full-blown global trade war has begun.
Imports of oil, gas and refined products were given exemptions from Trump’s sweeping new tariffs, but the policies could stoke inflation, slow economic growth and intensify trade disputes, weighing on oil prices.
Adding to the downward momentum, the OPEC+ group comprising the Organisationof the Petroleum Exporting Countries and its allies decided to advance plans for output increases. The group now aims to return 411,000 barrels per day to the market in May, up from the previously planned 135,000 bpd.
At the weekend, OPEC+ ministers emphasised the need for full compliance with oil output targets and called for over-producers to submit plans by April 15 to compensate for pumping too much.
