IEA: Africa’s Oil Demand will Grow Faster than the Rest of the World

The International Energy Agency (IEA) has just released its medium-term oil market report,  in which it states that over the next five years Africa’s demand for oil will begin to increase rapidly, outpacing the rest of the world’s demand growth, as it levels of transport and electricity use rise with economic development.

From 2012 to 2018 consumption of gasoline and gasoil is estimated to grow by 4.5 percent a year, with jet fuel and kerosene demand expected to grow by 3.9 percent. This will mean that Africa’s total oil use will increase by 4 percent a year, more than the 1.2 percent forecast around the rest of the world.

In the report the IEA noted that “the very low historical base of African demand and the region’s rapid income gain mean that great leaps in demand growth may be in the cards. The prospect of excess global gasoline and naphtha production in the next few years could set the stage for an abundance of light ends looking for new market outlets.”

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LNG is expected to see the largest increase in demand due to its ease of transportation. Several African countries are now building plants and terminals to receive and use the gas.

Overall crude refining capacity reached 3.47 million barrels a day last year, according to Bloomberg, and that is more than enough to meet demand, especially with the addition of the recently announced refinery to be constructed in Nigeria. Unfortunately the continents refineries only run at 60 percent at the moment, meaning that Africa remains a net fuel importer.

By. Charles Kennedy of Oilprice.com