According to Mufti, annual lubricant consumption in the continent is 1.8 million metric tons, which represents around 5 percent of global demand. The major segments are transport, which accounts for 47 percent, [consumer] automotive with 22 percent, power generation (9 percent), cement and mining (8 percent) and agriculture (4 percent). Total base oil produced in the continent meets only 52 per cent of overall demand, Mufti said, so 20 percent of the base oil that the industry uses is rerefined.

The main refineries are in South Africa, Egypt, Algeria and Morocco, producing a total of 25,100 barrels per day, Mufti said. Demand is concentrated in the key markets of South Africa, Egypt, Algeria, Nigeria, Sudan and Morocco, which account for 75 percent of the overall African lubricant market.

Given the low levels of income throughout much of Africa, price remains a crucial determinant of purchase choices, followed by brand and quality, Mufti said. Price alone is responsible for 26 percent of buying decisions. Spare part distributors play an important role as a result of what he describes as suggestive selling and ongoing credits.

With the emphasis on price, quality therefore remains skewed towards lower lubricant grades, typically API CC, CD and CF and SAE 40 and SAE 50. For gear oils, GL1 and GL4 grades predominate. But Mufti added that the market is evolving towards higher tier lubricant quality, with considerable quantities of finished lube imported from the Middle East. Still, shortages frequently occur, boosting the use of recycled oil.

Competitive dynamics are changing and recently Vitol and Helios won Shell’s downstream stakes in 19 African countries. BP has also announced it intends to sell its marketing business in several countries. Chevron is also understood to be reviewing operations in all markets outside South Africa, he said.

The South African market remains attractive for several reasons, said Mufti. With a market of 360,000 tons per year, it accounts for around 1 percent of global consumption and 20 percent of African demand. It also has a car population of around 2.1 million. Major companies such as Shell, BP and local Engen, as well as Chevron and Total, are present in the market. Mufti acknowledged it is a largely deregulated market, broadly competitive with a high number of international brands.

The larger but more complex market in Egypt consumes 450,000 tons per year and equates to 25 percent of the entire African market. It includes major players such as ExxonMobil and Shell, local players COOP and Misr, and also Caltex, Total, Tamoil and Petromin. Higher viscosity engine lubricants remain in demand with API SF, CD and CF dominating in a car population of 4 million. Distributors and spare part outlets account for 60 percent of supply. Customs import duty is not levied if the import originates from Arab or African countries and 10 percent is charged on imports from Europe.

Perhaps the market that continues to excite many is Nigeria, Mufti said. With 154 million people, it is Africa’s most populous nation but one of the most institutionally corrupt. A market of 185,000 t/y and 10 percent of the overall market, it has attracted companies such as ExxonMobil, Total, Texaco, Africa Petroleum, Conoil, Oandor, Romin, Dozzy and Zenon.

The car population is around 6 million with API SL, SF, CF and CD constituting the bulk of consumption. There is also a high demand for diesel engine oil because of the dilapidated nature of the power infrastructure in the country. Key industries include petrochemicals, power generation, mining, transportation, rubber and paper.

Algeria is similarly problematical, Mufti said, with a complicated import process that includes a 17 percent customs duty and foreign exchange restrictions that make money transfers subject to clearance. Lube demand is 150,000 t/y, which corresponds to 8 percent of the African market. The Algerian car population 1.3 million, estimated Mufti. The main suppler is Sonatrach but Caltex, Castrol and Fuchs also meet demand and high viscosity engine oils are very popular, he said.

Morocco is essentially a low grade market typically CD and SF with a size of 80,000 t/y and 4 percent of the total African market. It has a car population of 1.8 million. The market is dominated by government related business that includes municipalities, mining, transport and rail. Company contract business is a high proportion of the overall lubricant market Mufti said. Customs duties can reach 50 percent but are not levied if the origin is from Arab states. Semi- and fully synthetic lube requirements are also growing. Shell, Afriquia, Mobil (Oilibya) and Total are the main competitors with CMH, Somap, Petromin and Zic also present.

The continent’s fastest growing market is Sudan, but political issues continue to resonate, presenting a challenge for companies operating in the market. It has a market size of 87,000 t/y representing 5 percent of the African market and a car population of 1.4 million. Fuchs and Petronas are the main players followed by Lama, Afro King and Petromin.

Mufti added he expects growth to average 3 to 5 percent per annum.