– Afreximbank to launch African Energy Bank with $5bn in 2025
The African Energy Week (AEW) 2024, held from 4 to 8 November in Cape Town, South Africa, brought together key industry leaders to address pressing issues around the growth and financing of Africa’s energy sector.
The conference featured a panel discussion titled “From Feasibility to Bankability – Developing a Sustainable Finance Strategy for African Downstream.” The session explored the essential steps required to secure financial backing for the continent’s growing downstream sector.
According to AEW reports, “Africa needs to prioritize the development of its downstream sector to ensure maximum exploitation of local resources and to achieve energy security. Across the continent, there is rising demand for petroleum, leading to new developments launching across the downstream sector.
“Nigeria’s Dangote Refinery – the largest in Africa began producing diesel and aviation fuel this year. With a capacity of 650,000 barrels per day, the facility is set to meet Nigeria’s domestic energy needs and will, upon reaching full capacity in mid-2025, position the country as a major exporter.”
Anibor Kragha, Executive Secretary of the African Refiners and Distributors Association (ARDA), emphasised the importance of a clear investment path for the downstream sector.
“With a growing population and economy, we have to have a clear path to making investments downstream. We must have the right regulatory frameworks in place, and we have to drive project realization. We also need an ESG [environmental, social and governance] overlay as well as human capital, who will actually make the investments. When you have these things in place, you can start to have discussions with financiers,” Kragha said.
ARDA, which has been at the forefront of harmonising financial strategies for the African downstream sector, also revealed plans to launch a database of sustainable energy projects across the continent. This initiative aims to support the creation of an actionable downstream plan for the association, aligning with efforts to develop sustainable pan-African infrastructure.
One of the main challenges discussed during the session was the limited access to finance within the sector. René Awambeng, Founder and Managing Partner at Premier Invest, pointed out that financing gaps are a major barrier.
“The critical challenge in investment is the lack of access to finance. That finance will power infrastructure development, but we as a continent, we continue to suffer a lack of access to affordable finance. As a continent, the way the financial sector is shaped, we have constraints. We need to find solutions to this to bridge the$200-billion-per-year financing gap,” Awambeng stated.
Vinay Guddye, Director of Financial Services and Africa Center of Excellence at the Economic Development Board, Mauritius, added, “We need to attract more private funding into projects going forward.” His comments underscored the growing need for private investment to support Africa’s downstream expansion.
The discussion also highlighted the essential role of private players in the sector. The entry of indigenous and international oil refiners, marketers, terminal operators, distributors, and regulators has already brought significant capital into the market.
Lloyd Manokore, Managing Principal Consultant at Emerging Africa Advisory Group, explained, “[The entry of private players in the downstream market] has served to attract significant capital for the sector and showcases significant changes in the downstream funding space.”
The panel concluded by stressing the importance of collaboration between all stakeholders, including local and international players, to drive investment, electrification, and the adoption of digital technologies across Africa’s downstream sector. This collaborative approach is seen as key to overcoming the financial barriers and unlocking the full potential of Africa’s energy resources.
Meanwhile, At AEW 2024, Oando, Nigeria’s leading multinational energy company, unveiled its ambitious target of reaching 100,000bpd by 2028. This follows the company’s recent acquisition of Eni’s Nigerian Agip Oil Company (NAOC) assets earlier this year. The announcement was made during an exclusive Fireside Chat at the Invest in African Energies conference, held as part of the event.
In an interview with Bloomberg, Oando’s Managing Director for Energy Resources, Ainojie Alex Irune, outlined the company’s strategies to significantly contribute to Nigeria’s oil production goals, with an aim to exceed 2 million bpd in the coming years. He also highlighted the increasingly important role of indigenous companies in the Nigerian energy sector, particularly as international oil companies (IOCs) divest from onshore and shallow water assets.
“In the space of 24 months, you’re going to see about 60%-70% [of Nigeria’s production] by indigenous players, just based on the transition of IOCS to the deep offshore and the acquisitions we have seen, whether it’s Seplat, our deal or the ongoing Renaissance deal,” said Irune.
The company’s focus is now on maximising the development of assets acquired through the NAOC deal, which has expanded Oando’s stake in Oil Mining Leases (OMLs) 60, 61, 62, and 63 to 40 per cent and nearly doubled its reserves to one billion barrels of oil equivalent. The acquisition also provides Oando with a greater stake in NAOC’s joint venture assets, which include 40 oil and gas fields, 12 production stations, and key infrastructure such as pipelines, processing plants, and the Brass River Oil Terminal.
Irune further emphasised that Oando is always open to further mergers and acquisitions across the continent, stating, “We’re always looking to do a deal. We stay where we have a comparative advantage, but we don’t rule out any markets. Nigeria is the first place we look – we have an immense amount of potential. As a leading energy company, we owe it to the country to reach that potential.”
He touched on the impact of Nigeria’s Petroleum Industry Act (PIA) in strengthening the investment case for oil and gas, particularly for gas, and fostering synergies within the industry. The Oando-NAOC deal was the first major M & A transaction to be completed since the implementation of the PIA.
Irune sees the deal as a key move in boosting oil and gas production, with a view to supporting Nigeria’s long-term energy transition.
“We are very serious about energy provision. When you frame the energy journey, there must be renewable energy in that basket. In the immediate term, our focus is on producing every drop of oil we can to be able to fund that transition journey. We will use gas as a transition fuel – our assets are largely gas assets as a company, and Nigeria is largely a gas province as a country,” he stated.
On the Company’s official X account, Alex Irune also explained that to create a thriving oil and gas industry in Africa, there is a need to build a vibrant environment that supports growth and sustainability.
“The only way value stays on the continent is if indigenous players acquire these assets. By increasing local activity and fostering collaboration, we can reduce the high costs of operations, attract essential skills and equipment, and drive development within the region,” he concluded.
During the AEW conference, Helen Brume, Director of Project & Asset-Based Finance at Afreximbank, outlined the bank’s plans to accelerate energy investments across Africa. Afreximbank, which promotes trade and infrastructure development on the continent, has grown its asset base to $37.3 billion and maintained investment-grade ratings from agencies such as S&P and Moody’s.
According to reports from the official X account of Africa Energy Week, Brume explained that Afreximbank, with a mandate to promote trade and infrastructure development in Africa, has significantly strengthened its financial position.
“With a mandate to promote trade and infrastructure on the continent, Afreximbank has grown its asset base to $37.3 billion and maintains investment-grade ratings from major agencies, including S&P and Moody’s,” explained Brume,” she said.
In a bid to further support Africa’s energy transition, Afreximbank will launch the African Energy Bank in January 2025, with an initial $5 billion to be deployed. “Our commitment to Africa’s energy future is clear, with over 32% of our balance sheet dedicated to energy projects,” Brume noted. “The bank has already played a pivotal role in financing key projects such as Angola’s Cabinda refinery, the Dangote Refinery and Petrochemicals complex and an LNG train project in Nigeria.”
With the establishment of the African Energy Bank, Afreximbank aims to play a central role in overcoming the continent’s energy challenges while driving sustainable growth across the region.
