The rapid expansion of Africa’s fuel demand is driving deal-making activity in the continent’s retail business, as trading houses to oil majors chase the growth that’s lacking in their home markets, reports Bloomberg.
Puma or Vivo or TotalEnergies
“There is a new wave of consolidation of assets as existing players are either rationalizing (Puma) or expanding (Vivo) their networks, or both (TotalEnergies),” Elitsa Georgieva, executive director at Citac, a consultant that specializes in African refining, wrote in response to questions from Bloomberg. “Meanwhile, there is an increasing number of African energy companies that are expanding rapidly.”
Africa’s oil consumption is forecast by the US Energy Information Administration to significantly outpace Europe and North America in the coming years. Demand for petroleum products is set to increase over 6% annually in some parts of continent in 2023, according to Citac.
That’s a faster pace than the decade to 2021, when total oil consumption rose 1.4% a year on the continent, outstripping the US and Middle East, and compared with a contraction in Europe, according to BP’s Statistical Review of World Energy.
Africa’s population of 1.3-billion is served by about 45 000 retail stations, according to Citac. The US contains more than 145 000 outlets, according to the American Petroleum Institute.
Higher growth potential comes alongside other risks, such as political instability. Trafigura’s Africa-focused retailer Puma Energy has run into challenges on the continent and lost money in 2021. It is currently “focused on turning around the business and reinvigorating our core downstream businesses, particularly in high potential markets,” a spokesperson said.
The most recent deal in African fuel retailing was Vitol’s purchase of a majority stake in Petroliam Nasional’s Engen. The transaction will grow the footprint of Vitol’s Vivo Energy unit by 50% to 3 900 stations. Only TotalEnergies has a bigger presence on the continent with over 4 700 retail outlets and an estimated 17% market share.
Africa as a “growth continent” is bound to increase demand for transportation, Vitol’s CEO Russell Hardy said in an interview in Cape Town. That makes the region a more attractive target than “a country that’s likely to be full of Teslas in ten years’ time.”
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Source: Bloomberg
