In light of the upcoming 2020 sulphur cap, Africa is preparing to deal with the emissions and the alternative fuels. The impact of the new regulations on Africa will be profound given the mix of lower and higher Sulphur in oil production across the continent.
PwC Nigeria in partnership with Energex Partners and Downstream Advisors Inc. developed a report examining the impact of the regulation on Africa in detail considering key actors in the African market viz producers, refiners, consumers, governments, industries among others.
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It is reported that the new regulation will add billions of dollars of cost to Africa, with the increasing price of fuel for shipping, raising the delivered cost of imports and depressing those of the exports.
In comparison to the global average, there are generally less complex refineries in Africa; there are government subsidies for road-fuel; there is a higher dependence on imported fuels; a higher proportion of power generation fed by high Sulphur fuels.
Overall, Africa is a crucial importer of Automotive Gas Oil/Diesel and Gasoline, and has exposure to rising prices resulting from the change in refining activity needed to meet the new regulations.
The impact of the new regulations on the African oil sector will profound given the mix of lower and higher sulphur oil in production in some places.
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