By Sunny Oputa

Despite much debate that downstream sector of Africa’s oil and gas business has not peaked enough to stir economic growth in the region; the impact of the contributions of indigenous companies in energizing downstream activities in the continent of Africa highly commendable.  Downstream businesses according to market analysts, remains obvious catalyst that could aid in the stimulation of vast economic growth in Africa.  It entails that if accelerated development is to be achieved in the continent; maximum integration of both upstream and downstream activities must be injected in the region’s market. The absence of robust presence of downstream business is one of the causes of the stymied economic growth be experienced in most African countries.

About 10% of the world’s oil reserves are in Africa and out of the estimated 626334 Tcf of gas reserves in the world, the continent of Africa contains about 51492 Tcf.  Also 14 African countries are net oil exporters. Despite all these pointers, the promotion of downstream sector has not been given adequate attention by the governments of some of these African States and operators to leap frog economic acceleration.

Playing along side to collaborate or support the efforts of the various governments of Africa in enhancing downstream activities in the region, are some viable indigenous companies that have shown enough dexterity and leadership in the sector and have also garnered   sizeable success to distinguish them selves  from the pack.

Oando plc has distinguished itself as a clear market leader in the West African downstream sector and also as an indigenous oil and exploration company of immense promise. Oando plc, formally known as Unipetrol Nigeria plc started operations in Nigeria as a petroleum marketing company in 1956 under the banner of ESSO West Africa Inc.  At present, the company has more than 600 retail outlets in Nigeria, 5 depots with a capacity of 40 million liters, 3 terminals, 9 LPG plants with a capacity of 750 metric tones, 3 aviation fuel depots in Lagos, Abuja and Kano, 2 bitumen plants with a capacity of 12,000 metric tones, a lubricant blending plant. Its operations transverses outlets in Ghana, Togo, Sierra Leone, Benin and Niger.

In 2004, Oando consolidated its global oil supply and trading businesses, and emerged as Africa’s largest independent and privately owned oil trading company.  The company is on the verge of developing a 360,000 bpd capacity Greenfield refinery in Lagos state and a 210,000 capacity product receiving terminal in the Lekki Free Trade Zone also located in Lagos state., South West of Nigeria./  The idea behind this project according to the management of Oando is to “bridge the supply gap with respect to petroleum products availability in Nigeria.”. In March this year, Oando commissioned a 12.15 megawatt plant, its first Independent Power Plant (IPP), Akute power to supply stable electricity to the Lagos Water Corporation

Oando, through its entity and business arm called Gaslink is pushing towards establishing the largest gas pipeline grid in Sub-Saharan Africa. This move in gas pipeline networks is to accelerate local supply of gas and clean energy to domestic users in Nigeria.  In 2009. The company was selected by Ghana national Petroleum Corporation (GNPC) to develop systems, assets and infrastructures to harness the gas that will be produced from the Jubilee oilfield which hopefully would commence production at the end of this year. To extend its growing and extensive operations, last year October, Oando signed a Memorandum of Understanding (MoU) with Gasprom, Russia’s biggest energy company to collaborate in massive development of assets and infrastructures in the West African sub region and entire Gulf of Guinea.

In the same vein. Engen which is 80% owned by Petrolia Nasional Berhard (PETRONAS), Malaysia’s national oil company and 20% by Worldwide African Investments Holdings (WAIH) , has remained a leader and  a major downstream focused company in South Africa, the region’s biggest market. Engen owns the Enref refinery, South Africa’s oldest and currently second biggest refinery with a capacity of about 135,000 barrels of petroleum product a day.  The company which is focused on the refining and marketing of petroleum products also offers retail services in more than 17 Sub-Saharan countries and also extends its services to the Indian Ocean Islands.

Engen commenced trading under the brand name of Vacuum Oil in Cape Town in 1981 and in 1986 began a concerted effort to expand its operations in other African countries. Toady, the company operates in Botswana, Burundi, DRC, Gabon, Ghana, Guinea Bissau, Kenya, Lesotho, Mozambique, Namibia, Rwanda, South Africa, Swaziland, Tanzania, Uganda, Zambia and Zimbabwe. In the philosophy of this Africa’s behemoth, Engen is poised to become a “Champion of Africa” by the year 2016.

Sasol is another dynamic indigenous company in the region that has made giant strides in the downstream area of the African economy. An integrated energy and chemical company, Sasol has a global operation that spans beyond South Africa, Mozambique and Gabon.  The company has commenced an estimated R14billion Wax Expansion Project in Sasolburg. The first phase of the project is expected to come into operation in 2012, and followed by the second phase in 2014.  The board of Sasol has also approved the construction of R1.9 billion ethylene purification at its Sasol Polymers plant in Sasolburg. The plant which is expected to go on stream in 2014 will help to accelerate polyethylene manufacturing and conversion of plastics in South Africa.

The leading indigenous operator in East Africa is KenolKobil. . KenolKobil is headquartered in Nairobi, Kenya and has massive operations which stretch to Rwanda, Zambia, Uganda, , Burundi, DRC and Ethiopia to mention but a few.  The Group is heavy on the marketing and distribution of petroleum products in the region and develops PLG, Storage and filling plants such as the one in Kigali and kampa. With many retailing outlets in its arm -bit, KenolKobil has manifested a big mark in the regional market.

kenolKobil through a Sales Purchase Agreement signed withEngen took over the entire share holding of Oil Burundi S.A. Currently, kenolKobil runs effectively six subsidiaries outside Kenya: Kobil Burundi S.A., Kobil Uganda, Kobil Tanzania, Kobil Rwanda, Kobil Zambia and Kobil Ethiopia.

The days when upstream and downstream operations in Africa were primarily dominated by foreign mega companies are gradually fading.  Indigenous companies have continued to show readiness to pick up the mantle and ensure positive growths and steady supply in the continent. Recently, Shell Oil Products Africa announced that it is reviewing ownership option for some of its downstream businesses in 21 countries in the continent of Africa. This means that Shell will sell most of its businesses if the outcome of the review supports that direction.  The review of Shell’s downstream businesses (Commercial Fuels, Lubricants, Retail, LPG, Bitumen, Aviation and Marine)  in Africa includes operations in the following countries: Algeria, Morocco, Tunisia, Egypt, Cote d’ivoire, Burkina Faso, Ghana, Togo, Senegal, Mali, Guinea, Cape Verde, Kenya, Uganda, Tanzania, Botswana, Namibia, Madagascar, Mauritius and la Reunion , plus the LPG business in  South Africa .It is expected that some of the serious players and result-oriented indigenous companies will absorb or buy over several operations to keep the region’s economic wheel in progress.

The stabilization of oil price, and the new market confidence which financial institutions both local and international have accorded indigenous performing companies are the stimuli that would propel a major growth and development in the downstream sector. This will also enlarge the African economy.

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