Africa’s downstream industry has emerged as a highly attractive investment opportunity for regional and foreign players. Despite offering a wealth of resources, lack of adequate refining infrastructure has resulted in import-heavy economies continent-wide. This trend, however, is set to reverse as recent oil and gas discoveries motivate the development of new refining plants and the upgrading of existing infrastructure.
In Senegal, refining company Société Africaine de Raffinage (SAR) is making strides towards upgrading the SAR refinery under efforts to boost production, reduce imports and strengthen economic growth. SAR has identified three major challenges surrounding the refinery transformation and will provide insight into how the company is addressing these challenges during the African Energy Week (AEW) conference this October (16-20). SAR is leading a Technical Session on the refinery during the conference and will engage with a suite of investors and project developers.
Senegal itself is on the precipice of becoming a regional petroleum hub with the start of production at the 2.3 million ton per annum (mtpa) Greater Tortue Ahmeyim Phase 1 project and the 100,000 barrel per day Sangomar oilfield development next year. Sangomar, specifically, is poised to open up lucrative opportunities for the country, bringing new supply on the high-demand market. The introduction of oil and gas to the Senegalese market has raised concerns over the capacity of existing infrastructure. Despite possessing domestic resources, Senegal relies on petroleum imports to sustain its growing economy. SAR identified the challenges associated with existing infrastructure and put in place a plan to transform the refinery into a sustainable processing complex, a model which can be replicated by other resource-rich countries in Africa.
Representing one of the oldest refining facilities in West Africa, operating since 1961, the SAR refinery has long-played an important role in supplying the domestic market with petroleum products. This role, however, is bound to significantly advance as Sangomar crude becomes available from 2024. To date, the SAR refinery has held a capacity to produce 1.2 mtpa. In 2018, the company announced plans to expand refining capacity to meet local demand, increasing gasoil and liquefied petroleum gas processing by between 15% and 20% while also addressing technical constraints.
Following a preliminary study by SAR, the company identified various solutions to enable the refinery to adapt to future evolutions of petroleum product specification in Africa – specifically, aligning with AFRI 6 standards. Now, progress is being made to accelerate with the upgrades. In 2021, renovations kicked off to increase capacity to 1.5 mtpa, enabling the refinery to meet 70-75% of domestic demand. However, this was just the start, and SAR plans to upgrade the refinery even further to strengthen capacity, productivity and sustainability.
Earlier this year, SAR and the African Export-Import Bank were engaged in advanced discussions about raising $500 million in syndicated finance to support further upgrades at the refinery. Building on the success of previous renovations, the latest upgrade will see capacity increase to between four and five mtpa with enhanced focus on cleaner fuels. To date, the refinery has relied predominantly on Nigerian crude. The upgrade will see the SAR refinery rely on a blend of Nigerian and Senegalese oil – 25% and 75%, respectively – marked a major milestone in the country’s energy independence.
“SAR has demonstrated a commitment to transforming both the SAR refinery into a productive and energy-efficient complex as well as Senegal into a regional petroleum hub. In the current energy transition context, securing investment for refining facilities has proven challenging. Companies such as SAR have advocated for the importance of downstream infrastructure investments, calling for an increase in sustainable refining under efforts to make energy poverty history in Africa,” states NJ Ayuk, Executive Chairman of the African Energy Chamber (AEC).
During the AEW 2023 conference this October, the SAR-led Technical Session will explore transformation strategies currently underway, best practices for meeting the requirements of AFRI 6 compliance – comprising 50ppm minimum of sulfur – and how SAR plans to process 100% of Sangomar crude. The Technical Session will also explore how SAR plans to meet 100% of Senegalese fuel demand by 2030 and efforts to construct a petrochemical complex to produce products that are currently imported. The SAR refinery stands to serve as a benchmark for other facilities in Africa and the Technical Session will provide the insight potential investors need to make informed decisions about supporting the SAR refinery transformation