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In line with the expected growth of regional economies and higher sales of passenger vehicles, gasoline demand will continue to grow throughout the studied period. It is projected to grow 4% per year from 2016 to 2035.
The naphtha market in Africa is very small, accounting for about 0.14% of the region’s demand. More than three-quarters of naphtha volume produced in Africa is exported. The largest regional market for naphtha used to be Libya (60% in 2010), but the civil war of 2011 and further unrest in 2013 have contributed to an unprecedented drop in demand to a 44% regional share in 2013. Egypt is now dominating the naphtha market and will continue to do so with construction of a new naphtha cracker to be completed around 2020. Overall, Africa’s annual growth in naphtha demand from 2016 to 2035 is projected to reach 2% (see figure below), with Egypt as the principal driver of demand after 2016.
Gasoline quality specifications are in the early stages of development in Africa. The biggest and most urgent challenges facing African refiners seeking to improve gasoline quality are sulfur reduction and octane improvement.
In many areas, it is possible to process light, low-sulfur indigenous crude oil, which allows refiners to achieve low-sulfur content well below the average African quality. Stratas Advisors thinks that the actual average sulfur content of premium and regular gasoline grades is below 500 ppm in those regions. At a regional level, gasoline quality standards are part of the proposed guidelines set in ARA’s AFRI specifications as a road map for fuel quality in Africa. The road map aims to harmonize key fuel quality parameters and therefore addresses only RON, lead, sulfur and benzene, leaving individual countries to set their own limits for other quality parameters.
In addition to the AFRI road map, there are other sub-regional activities. In 2007, the standardization bodies from countries of the East African Community (Kenya, Tanzania, Uganda, Burundi and Rwanda) adopted the East African Standard EAS 158:2007 Automotive Gasoline Specification, applicable in these countries. Since 2011, EAC countries have been discussing changing their gasoline specifications to make them more stringent. The Southern African Development Community (SADC) and the Economic Community of West African States (ECOWAS) have their own initiatives in which governments encourage implementation of AFRI specifications. These, as well as the EAS specifications, are voluntary, and countries are not obligated to follow them.
Only in recent years, mainly since 2005, has the majority of the region moved to unleaded gasoline. Only in Algeria can leaded gasoline be found on the national market. Its refining industry had planned upgrades that should result in the production of unleaded gasoline after 2015. The figure below compares market octane requirements and refinery production. Oxygenate (i.e., ethanol, MTBE) and additive use is expected to increase slowly through 2035, limiting the growth of refinery octane demand. Although MTBE could be available on the African market soon because of its global availability, ethanol use is not expected to make a strong impact before 2020. However, considering the state of the refining industry and expected splash-blending of ethanol, very little octane benefit will be obtained from ethanol blending in later years, when its volume will become significant.