Afreximbank earmarks $3bn to support locally refined oil, gas products

The African Export–Import Bank (Afreximbank), a key investor in oil and gas projects, has earmarked $3bn (R58.29bn) to finance the purchase of refined products within Africa as part of broader plans to boost refining capacity, a senior executive says.

Africa exports around 80% of its crude oil, and 45% 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," Kanayo Awani, executive vice-president at Afreximbank told an energy conference in Cape Town, South Africa, on Monday.

Awani said the $3bn revolving intra-African oil importing financing initiative will be 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 (bpd) Dangote refinery in Nigeria, and the Lobito and Cabinda refineries in Angola, has traditionally helped finance imports of refined products from outside the continent.

Africa spends an estimated $30bn (R582.94bn) 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% from 2022 levels to reach 142-million metric tons by 2040.