Final282828282828282828 Report Sub-Saharan Africa Refinery Public Disclosure Authorized Project Volume II-A: Refinery Study September 2009 Submitted to: Public Disclosure Authorized The World Bank and The African Refiners Association Public Disclosure Authorized Submitted by: ICF International 9300 Lee Highway Fairfax, VA 22031 USA Tel: 1.703.934.3000 Fax: 1.703.934.3740 & EnSys Energy & Systems 5134 Lexington Ridge Drive, Lexington, MA 02420 USA Public Disclosure Authorized Tel: 1 781.274.8454 Fax: 1 888.453.1270 World Bank Refinery Report 1 i Volume II-A: Final Refinery Study Report Table of Contents TABLE OF CONTENTS Page LIST OF EXHIBITS...............................................................................................................iii ACKNOWLEDGEMENTS...................................................................................................vii ACRONYMS.........................................................................................................................viii INTRODUCTION .................................................................................................................... 1 OVERVIEW ........................................................................................................................ 1 FUEL SPECIFICATIONS ..................................................................................................... 2 OIL PRICES........................................................................................................................ 4 REGIONAL GROUPINGS..................................................................................................... 5 THE GLOBAL ECONOMIC RECESSION ............................................................................... 7 STRUCTURE OF THE REPORT............................................................................................ 8 2: ANALYTICAL APPROACH AND ASSUMPTIONS .................................................... 9 ANALYTICAL APPROACH .................................................................................................. 9 MODEL USED................................................................................................................... 10 WORLD® MODELING CASE STRATEGY........................................................................... 10 ASSUMPTIONS ................................................................................................................ 11 GLOBAL ASSUMPTIONS .................................................................................................. 11 SUB-SAHARAN AFRICA ASSUMPTIONS......................................................................... 16 DEMAND ................................................................................................................... 16 CONSTRAINTS ON SUB-SAHARAN REFINERIES IN WORLD®......................................... 17 SSA PETROLEUM PRODUCT SPECIFICATIONS............................................................... 18 MECHANISMS FOR ACHIEVING AFRI-4 STANDARDS ............................................ 22 3: THE BASE CASE AND THE 2015 CASES................................................................ 24 WORLD® MODEL BASE CASE RESULTS ......................................................................... 24 REFINERY CONFIGURATIONS AND NAMEPLATE CAPACITY ....................................... 24 WORLD® MODEL 2015 CASES RESULTS....................................................................... 29 CURRENT FUEL SPECIFICATIONS IN 2015: WORLD® CASE 215 ................................. 29 AFRI-4 FUEL SPECIFICATIONS IN 2015: WORLD® CASE 216....................................... 40 WORLD® MODEL RESULTS: BASE CASE AND 2015 CASES COMPARED....................... 50 4: THE 2020 CONSTRAINED CASES............................................................................. 53 OVERVIEW....................................................................................................................... 53 CONSTRAINED CASES RESULTS ..................................................................................... 54 CONSTRAINED CASE: CURRENT FUEL SPECIFICATIONS IN 2020: WORLD® CASE 224 ........................................................................................................................ 54 CONSTRAINED CASE: AFRI-4 SPECIFICATIONS IN 2020: WORLD® CASE 220 .......... 64 WORLD® MODEL RESULTS: BASE CASE AND 2020 CONSTRAINED CASES COMPARED ..................................................................................................................... 76 5: THE 2020 OPEN MARKET CASES............................................................................. 79 OVERVIEW....................................................................................................................... 79 OPEN MARKET CASES RESULTS..................................................................................... 79 OPEN MARKET CASE (FAVORABLE TO SSA): CURRENT SPECIFICATIONS IN 2020: WORLD® CASE 221......................................................................................................... 79 OPEN MARKET CASE (FAVORABLE TO SSA): AFRI-4 SPECIFICATIONS IN 2030: WORLD® CASE 222 ......................................................................................................... 92 ICF International i World Bank September 2009 Volume II-A: Final Refinery Study Report Table of Contents OPEN MARKET CASE (UNFAVORABLE TO SSA): AFRI-4 SPECIFICATIONS IN 2020: WORLD— CASE 223 ...................................................................................................... 104 WORLD® MODEL RESULTS: BASE CASE AND 2020 OPEN MARKET CASES COMPARED ................................................................................................................... 126 6: COST BENEFIT ANALYSIS AND CONCLUSIONS ............................................... 129 SUMMARY OF IMPACTS ON SSA REFINING ECONOMICS......................... 129 INCREMENTAL SUPPLY COSTS OF AFRI-4.................................................................... 134 COST BENEFIT ANALYSIS ............................................................................................ 138 CONCLUSIONS AND RECOMMENDATIONS..................................................................... 140 BIBLIOGRAPHY ................................................................................................................ 144 DATABASES ................................................................................................................. 144 NEWSPAPERS AND TRADE JOURNALS......................................................................... 144 OTHER SOURCES .......................................................................................................... 144 ICF International ii World Bank September 2009 Volume II-A: Final Refinery Study Report List of Exhibits LIST OF EXHIBITS Page Exhibit 1-1: AFRI Standards for Sub-Saharan Africa Transportation Fuels .................................. 3 Exhibit 1-2: Sub-Saharan Africa Demand Regions ........................................................................ 6 Exhibit 1-3: Sub-Saharan Africa Refinery Supply Regions ........................................................... 7 Exhibit 2-1: Modeling Case Descriptions ..................................................................................... 11 Exhibit 2-2: Differentials versus Crude Oil - Singapore............................................................... 13 Exhibit 2-3: Differentials versus Crude Oil – N.W. Europe ......................................................... 13 Exhibit 2-4: Differentials versus Crude Oil – USGC.................................................................... 14 Exhibit 2-5: Bonny Light versus Brent Crude oils........................................................................ 15 Exhibit 2-6: Model Constraints..................................................................................................... 18 Exhibit 2-7: Gasoline Official Government Specifications in Africa........................................... 19 Exhibit 2-8: Estimated Marketplace Gasoline Actual Qualities (Domestic and Imported ........... 20 Exhibit 2-9: Gasoil Official Government Specifications in Africa............................................... 21 Exhibit 2-10: Estimated Marketplace Gasoil Actual Qualities (Domestic and Imported)............ 23 Exhibit 3-1: Base Case Sub-Saharan Africa Refineries, 2008...................................................... 26 Exhibit 3-2: Base Case 210: Detailed Sub-Saharan Africa Refinery Capacities, 2008 ................ 27 Exhibit 3-3: Base Case 210: Revamping and Debottlenecking .................................................... 28 Exhibit 3-4: Base Case 210: Investment Costs ............................................................................ 28 Exhibit 3-5: 2015 Case 215: Incremental Capacity Requirements (Current Fuel Specifications) 31 Exhibit 3-6: 2015 Case 215: SSA Refinery Capacity and Throughput (Current Fuel Specifications)............................................................................................................................... 32 Exhibit 3-7: 2015 Case 215: Incremental Investment Costs (Current Fuel Specifications) $(2007) Billions .......................................................................................................................................... 33 Exhibit 3-8: 2015 Case 215: SSA Refinery Product Production and Yields (Current Fuel Specifications)..............................................................................................................................