London — Privately owned Sahara Group is looking to significantly increase its interests in Africa’s refining sector to take advantage of its trading of refined products in the continent, its executive director said Monday.
“The market has changed now. From your traditional typical trading [house], now you have to invest in infrastructure and provide some sort finance,” Tope Shonubi, said on the sidelines of the African Refiners Association conference in Cape Town.
“The market has evolved. You cannot just trade alone. There must be added value.”
Sahara is negotiating with Total to buy the French oil company’s stakes in refineries in Cameroon, Cote d’Ivoire and Senegal and it is also looking to take a controlling stake in Zambia’s only refinery, Shonubi said.
“Our objective is to upgrade all these refineries. It is strategic for us to be shareholders, it is strategic to ensure that because of our participation in the value chain and both in the crude supply and in products we have to make sure we have to maximize what we are doing.”
Sahara, an Africa-based energy and infrastructure conglomerate, has interests in crude and oil products trading along with a growing business in the upstream midstream and refining business in Africa and Europe.
Shonubi said Sahara already has less than a 10% stake in the 75,000 b/d refinery in Abidjan, Cote d’Ivoire, and the 27,000 b/d refinery in Dakar, Senegal. It hopes to increase those stakes by buying Total’s shares in the refineries.
Total owns a 19.71% interest in Sonara, Cameroon’s only refinery, a 7% stake in the Soci?t? Africaine de Raffinage (SAR) refinery in Senegal, and has a 20% holding in Soci?t? Ivoirienne de Raffinage (SIR), which owns and operates Cote d’Ivoire’s sole refinery in Abidjan.
Total was not available for comment.
Sahara is a key supplier of crude for the three West African refineries, all of which predominantly run on Nigerian crude.
Sahara is also in the midst on taking controlling a 70% stake in the 25,000 b/d Indeni refinery from the Zambian Government and hopes to conclude the deal in the coming months.
In late 2017, the government started the process to sell the refinery to private investors.
Shonubi said the Indeni refinery was running at around 50% capacity and when the deal was finalized he planned to build a hydrocracker at the plant.
Shonubi said he still has hoped to buy stakes in Nigeria’s refineries despite plans with Nigerian National Petroleum Corp. and a consortium to revamp the Kaduna and Warri refineries fell through year.
NNPC is now solely funding its refinery rehabilitation program after failing to reach agreement with foreign financiers it had been negotiating with since late 2017.
Despite Africa being a large producer of oil, the bulk of it is exported and the continent is heavily reliant on importing refined products because of a lack of refining capacity along with logistical and pricing constraints.
Africa, as a whole, has struggled to keep pace with the rest of the world in terms of refining capacity.
On the upstream side, Sahara still has ambitions plans to grow the business, and has set itself a minimum target to grow crude output to around 100,000 b/d in coming years, Shonibu said.
The company currently produces just over 21,000 b/d from OML 18 and OML 148 and the company is about to start producing more oil from OML 228, all of which are located onshore in the Niger Delta.