The competition of oil production in East Africa

For the past decade Ethiopia’s economy recorded an annual average of 10% growth, the International Monetary Fund estimated for 2018 an 8.5% growth.

Ethiopia’s economy has appealed to Asian investors. Venture capitalist from Japan, South Korea and India are interested in the new $4 billion oil refinery project. The new plant would import crude from Awash, located east of the capital Addis Ababa through Djibouti. The pipeline would run beside the railway that was completed by Chinese state enterprise.

The proposed production plant capacity is 120,000 barrels of oil per day (BOPD). Half of the refinery’s production will be exported to the surrounding countries in East Africa. The plant will double its capacity with the increased demand for motor vehicles.

There is an interest from a U.S. financial firm to invest in a project in which the Ethiopian government would be the sole distributor.

But the Fairfax Africa refinery faces competition from inside and surrounding countries. In the Oromia region, the local government is looking to import oil via Djibouti, while processing at a new refinery linked to the new railway. They are looking at 21% share of Ethiopia’s fuel market within five years based on a completed feasibility study.

As the third largest oil reserves in Africa, South Sudan is planning on flooding the market with more production. South Sudan is currently exploring to join the Organization of the Petroleum Exporting Countries (OPEC) as the crude production will double by the end of 2018.
South Sudan is expecting to start their new plant operations in 2020 with more facilities to follow, the facility will produce 120,000 bopd.

In 2006, Uganda discovered a crude reserve in Albertine rift basin located along its border with the Democratic Republic of Congo. The discovery could lead to billions of dollars in revenue from crude oil export. Uganda is planning to build a refinery that will process 60,000 bopd. The new plant will support new crude fields from Cnooc Ltd, Total SA and Tullow Oil Plc.