In Ain Sokhna, in the economic zone of the Suez Canal, Egypt will soon build a vast petrochemical complex of 7.5 billion dollars. The related contract was signed last week between the Principal Company for the Development of the Suez Canal Economic Zone and the Red Sea Refining and Petrochemical Company, under the chairmanship of Prime Minister Mostafa Madbouli. These facilities will be used to produce a variety of petroleum and chemical products including polyethylene (plastic); polypropylene (used in the manufacture of certain automotive parts, food packaging, furniture fabrics or disposable professional clothing); polyester (highly acclaimed in the textile industry); bunker fuel (used in large commercial vessels).
The leading consumer of oil in Africa, sixth in terms of reserves and the country having made the largest number of oil discoveries (62 fields) in 2020 on the continent, Egypt is thus preparing to take a decisive step towards independence vis-à-vis -to the global suppliers of these petroleum products and to become a major supplier. After billionaire Aliko Dangote’s mega-refinery in Nigeria which is currently 80% complete, according to a recent media outlet by the authorities, such projects have the power to inspire other oil-producing countries on the continent for whom the Free Trade Area African continent (Zlecaf) becomes the ideal setting. To answer any questions raised by the above table, Mahaman Laouan Gaya gives voice.
A petrochemical engineer and former international expert in energy and oil for the United Nations Development Program (UNDP), Mahaman Laouan Gaya was notably a minister in Niger. Until recently, he was Secretary General of the Organization of African Petroleum Producers (APPO).
La Tribune Afrique – What does this petrochemical complex project represent in terms of progress for a country on the continent like Egypt?
Mahaman Laouan Gaya – This is an extremely positive signal. Since the period preceding independence to date, African countries have much more tendency to export raw materials in the raw state, whether they are extractive resources (minerals, uranium, bauxite, etc.) , agricultural or animal. These are transformed in developed countries into finished products which return to African markets. Most of the added value therefore remains the prerogative of these countries.
The fact that Egypt today decides to promote an industry across the entire value chain, from exploration to distribution and export, is an initiative to be welcomed, because the added value will remain in place. Africa.
You should know that in the field of hydrocarbons, a petrochemical complex means a lot of things. There are thousands and thousands of products resulting from the petrochemical synthesis produced and which can in turn make it possible to manufacture many products that we will need here in Africa: (plastics, fertilizers, tires, adhesives, detergents, cosmetics, drugs, etc. packaging, etc.). If all of this is massively manufactured locally, we won’t need to import anymore. This shows the added value that can be obtained from the transformation in Africa of petroleum raw materials.
But with its industrial project, Egypt is targeting more the eastern Mediterranean markets…
This can be understood in the sense that each country relies on a comparative advantage. In view of its geographical position, Egypt tends to trade much more with the countries of the Eastern Mediterranean, Europe, Asia and the Middle East. It is the geographic factor that imposes it.
We must also consider the quality of traffic in Africa. Today, to go from Niamey to Johannesburg, we sometimes have to go to Paris, Doha or Dubai. So the intra-African trade traffic is very insufficient, which makes it very expensive.
But if there are regular frequencies between Egypt and the rest of the continent, if there is regularity in trade through rail, sea and air transport, transport costs will drop considerably. This will make it easier to sell products made in Egypt in sub-Saharan Africa.
I believe that with the emerging African Continental Free Trade Area (Zlecaf), African countries will be able to put aside their individual selfishness to promote the integration of their economies, so that we can reap great profits. of the neighborhood that nature has created between us.
All countries are interested in the Zlecaf, including Egypt, which has already indicated its willingness to take specific positions there. But can the Egyptian project and that of a mega-refinery led by Aliko Dangoté in Nigeria encourage the other major oil-producing countries on the continent to finally accelerate the industrialization of their resources?
When we look at global oil geopolitics, America began to exploit its hydrocarbons since the 18th century, the Middle East a little later. Africa, for its part, had only four countries with small production in the 1960s. Today, around forty African countries are either in the production phase or in the exploration phase. And the African subsoil is not overexploited as the European, Asian and American subsoils have been.
In terms of reserves today – I tell you as a specialist, Africa can challenge Saudi Arabia, the United States and Russia which are the world’s first, second and third largest oil producers, if the potential of the continent is being exploited strategically. What we lack is unity. Because if Africa sees itself as a single producer, we can challenge these large countries.
The international market is governed today by two types of barrel: Brent which is listed on the London market and WTI which is listed on the New York market. But in terms of quantity and quality, African oil today is more important than these two. If we are united, we can create a big market and the world’s oil can be benchmarked against African oil. This is what we are looking for through the Zlecaf, through African integration. If we can pull this out, African countries can prevail. This is what I believe.
When I was secretary general of the OPPA, we initiated what we called “the African oil market” which consists of creating African economic zones from infrastructure. The idea is to create regional markets before creating a continental market. Petrochemical complexes and oil refinery complexes can therefore be installed everywhere in Africa. This can protect us from hazards, because when there is often a shortage of oil in major producing countries like Nigeria, it’s hellish. We have queues to never end. It is paradoxical and unacceptable. African countries must therefore create markets within the framework of the Zlecaf, so that our petroleum products can be processed and sold on the spot. We have more than 1 billion inhabitants, so the market is large enough to consume most of our production.
In view of the evolution of Zlecaf, is the path towards the impetus of such a dynamic being paved in your opinion?
When I read the Zlecaf texts, I got the impression that they were written by politicians, because today Africa accounts for barely 2% of world trade. There is therefore a need to develop intra-African trade.
And in terms of oil, even if Western statistics tend to underestimate the potential of African oil, the reality is that today our continent weighs for 14 to 15% of the world production and reserves of black gold, So just like Saudi Arabia, like the United States, like Russia as I said. And while hydrocarbons constitute 25% to 30% of world trade, one cannot imagine a project of a free trade zone and ignore oil royally. When we look at the texts of the Zlecaf, we realize that oil is largely forgotten. It’s ridiculous. So that we can achieve the objectives that Africa has set itself within this framework, there are things to review.
Interview by Ristel Tchounand.