The African Refiners and Distributors Association (ARDA) and other energy experts have said over 90 percent of refineries on the continent require urgent upgrade otherwise the continent will continue to face dangers of high sulphur fuel.
These refineries, including those in Nigeria would require at least $15.7 billion for the upgrade to avert looming health and environmental challenges.
Speaking at the second Refining & Specifications Virtual Workshop organised by the African Refiners and Distributors Association (ARDA) the experts said without the upgrade achieving net-zero, Paris Agreement and other agreements targeting a cleaner environment may remain elusive.
With growing divestment and capital reallocation away from hydrocarbons and into renewables/energy transition, the stakeholders noted that consideration for environmental, social, and governance (ESG) in the downstream segment of Africa’s petroleum industry now remained a key leeway to the over $15.7 billion required for the continent to improve its refineries.
Maryro Mendez, Oil and Refining Research Analyst at Vitol, while speaking at the event noted that despite the withdrawal of funds from fossil, investment with sustainability plans is on the rise.
Quoting Bloomberg statistics, Mendez stated that sustainable debt annual issuance now hovers around $824.7 billion as capital raised for renewables and PE funds now dominate the energy sector. She noted that 66 carbon regimes around the world lead to a lack of carbon policy, price and timing of implementation.
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According to her, lack of uniform policies make it difficult for refineries to pass on the cost of carbon to its customers as carbon price shifts the cost burden of climate change, from society as a whole to the entities responsible for the emissions, providing lack of incentive for refiners to reduce emissions.
“The refining sector accounts for only three per cent of the global energy sector emissions. While refineries’ contribution to global energy sector emissions is low, the opportunities for reducing them are significant. Refineries globally have started thinking about measuring, monitoring and reducing carbon emissions Environmental sustainability has to be a priority for refiners and Africa is no exception,” Mendez stated.
She decried that 80 percent of refinery carbon emissions come from fuel combustion, hence fuel source and energy optimisation would present the biggest opportunity to reduce emissions. Accordingly, she stated that as a number of options exist for refiners, the technologies already exist to develop a refinery that has net zero carbon emissions. “The challenge is not technical but is commercial with facilities requiring sufficient incentive and capital to invest without impacting on their competitive position.”
Anibor Kragha, executive secretary of ARDA, who had noted that adoption of harmonised specification would halt importation of fuels not meeting the AFRI specs into Africa and give existing refineries until 2030 to upgrade their facilities to produce the cleaner, lower sulphur AFRI-6 (10 ppm) specifications noted that targeted financing is urgently needed for projects to upgrade refineries and infrastructure to produce and transport Cleaner Fuels.
“New process units required are to improve key fuel specifications, especially Naptha Hydrotreater (NHdT), Diesel Hydro-desulph. (DHDS), Benzene Extraction, Sulphur and Hydrogen Plants.
“Another key focus area is for African countries, especially those sharing common fuel supply chains,to develop an integrated policy covering both fuel quality and vehicle exhaust emissions to achieve the ultimate objective of Clean Air in our African cities. Without this integrated and coordinated policy, the objective of clean air will not be realised whether by imports or local production,” Kragha stated.
