Industry Trend Analysis - Refinery Upgrades Over New-Builds - MAY 2017


BMI View: We maintain that there is a low probability for a new-build refinery construction project in Ghana within our forecast period. A lack of private sector support for downstream projects and limited scope for public funding will continue to be the main barrier to investment in the refining sector.

Propositions for a new refinery in Tema, Ghana have been reiterated following initial rhetoric in mid-2016. The ambitious proposed 200,000b/d new-build refinery would target increasing fuels demand in the country, supplementing the existing Tema facility, which continues to struggle with poor utilisation rates and underinvestment.

However, with the Ghanaian government facing a heavy debt burden and a lack of support from private investment, we see limited scope for investment of a significant amount of capital into a high-risk new-build refinery in Ghana. The government is looking to consolidate its fiscal position following a ballooning budget deficit over the past three years and it subsequently may be unwilling to invest significant capital on a new facility. Furthermore, private investment into the West African downstream remains small, with poor prospective rate of returns and high country and operational risks weighing on prospective investments. We do however see a broader scope for further refinery upgrades at the existing Tema Oil Refinery (TOR) as an alternative to a large new-build project.

Utilisation Rates To Gradually Improve
Ghana: Refining Forecast
e/f = BMI estimate/forecast. Source: BMI/EIA

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