Online Reporter
A major curiosity in Africa is that while the continent hosts several countries among the world’s top 20 petroleum producers, with an even larger group holding proven oil reserves, Middle Eastern producers supply most of the petroleum products, especially to Southern and East Africa, where much of the continent’s industry is located.
Importing oil terminals and pipeline access tends to be concentrated along the Indian Ocean, built up over the years following the huge discoveries from the late 1930s of massive petroleum reserves in the low-lying areas along and near the Gulf.
This is why Gulf oil producers supply over a fifth of international petroleum products.
Africa’s oil producers are largely located in the northern part of the continent, led by Libya and Algeria, with Egypt providing a useful additional source.
Others lie in an arc along the Atlantic coast, stretching from West Africa, centred on Nigeria, to north-western Angola.
There are smaller reserves on the east coast, natural gas in Mozambique, crude oil yet to be tapped in Uganda, and small amounts in other countries, including some probably commercial gas reserves in Zimbabwe’s Muzarabani area.
In theory, Africa should be using purely African petroleum products — including fuels, natural gas and downstream products — with an emphasis on nitrogenous fertilisers, and should be able to view conflicts in other parts of the world with a degree of equanimity.
Africa has been remarkably successful since the wave of decolonisation from the 1950s in avoiding cross-border conflict and war, and even in dealing with outbreaks of internal violence in some countries.
This, combined with an absence of major choke points — except perhaps the Suez Canal, for which alternative routes exist — should ensure total, safe and secure continental supplies.
Two major challenges have hindered the development of intra-African trade in petroleum products. First is the familiar shortage of processing infrastructure — in this case, refineries.
This is perhaps typified by Nigeria, the world’s 14th-largest producer of petroleum, which, to feed its growing economy and huge population, must still import some refined fuels and petroleum products while exporting far more crude oil than it could ever use.
The second problem is the deficiency in transport infrastructure, including oil and gas terminals, pipelines for both products, and even transcontinental rail links — at least west–east rail lines and pipelines.
These are challenges that can be solved, bluntly speaking, by throwing money at them.
The general clean-up reforms in recent years across many African economies have made the shift to intra-African petroleum trade far more attractive to investors and development banks.
The African Export-Import Bank (Afreximbank), established to provide highly practical support for boosting intra-African trade, is taking the lead by making bridging finance available for new refineries — four are currently under development — as well as terminals for tankers, tank farms and pipelines, and even by supporting the routing of African oil to the petroleum-deficient eastern side of the continent.
As far as Zimbabwe is concerned, two major Afreximbank initiatives are likely to yield results in the reasonably near future.
These are support for the new Dangote Refinery in Nigeria and the development of a tank farm at Walvis Bay in Namibia.
This facility can, in the short term, supply Namibia, Botswana, Zambia and Zimbabwe with refined products by road, using a new fleet of 550 tankers, with a journey time of just five days from Lagos in Nigeria.
A trans-Kalahari pipeline will eventually be required, as will the long-projected railway across Botswana to link Walvis Bay to the rail network already serving its natural customer base in the heart of Southern Africa.
At the same time, the bank is discussing with the Mutapa Investment Fund and other private sector players the near-doubling of capacity in the pipelines that move fuel from Beira to Harare, as well as extending the network from Harare into Zambia, with intermediate terminal points to reduce road transport in both countries.
Thus, the US$3 billion Namibian tank farm and road tanker fleet represent only a beginning.
But every journey must start somewhere, and Afreximbank clearly believes that the returns on the infrastructure financed through its bridging facilities will be more than sufficient to service the loans and generate funds for rapid development.
At the same time, Egypt could become a major replacement supplier of nitrogenous fertilisers currently imported from Gulf gas producers, while Mozambique, with its proven gas reserves — now secured following the suppression of an unnecessary insurgency with the help of SADC — is also expected to become a major producer.
The Muzarabani gas field, once fully proven and brought into production, may be small compared with Gulf fields, but could supply gas for a modest power station and an ammonia plant, helping Zimbabwe become more self-sufficient in nitrogenous fertilisers.
The fact that investors continue to back the detailed exploration work required to follow up the proven discovery of natural gas suggests that production, at some stage, is almost certain.
