Trafigura secures diesel supply contract in Angola

Singapore-based commodities trading group Trafigura has won a tender to supply the Angolan state-run oil and gas company Sonangol with diesel, following a competitive bidding process in which 21 companies – including Aramco, Vitol and Glencore – were invited to submit proposals. The contract, which was announced on 17 February, is for a year, with the option to extend it for a further six months.

Sonangol is involved in the entire hydrocarbons value chain, from oil and gas exploration and production to the distribution of fuel through a network of service stations. Despite being one of Africa's largest oil producers, pumping about 1.16m barrels per day, Angola still needs to import gasoline and diesel to meet local demand. The country spends over US$2bn on petroleum imports every year. To address the situation, the government is making refinery development a priority, encompassing upgrades to the sole operating facility in Luanda and the construction of three new projects.

Trafigura has been present on the African continent for over two decades, and the continent plays an important part in the group’s global business. Trafigura is a major oil trader in Africa, with about 10% of its total crude trading turnover sourced from the continent. It procures oil from countries like Nigeria and the Republic of Congo, which it then sells to refineries globally. Additionally, the company supplies refined petroleum products, including gasoline, diesel, and jet fuel, to various African nations, leveraging its fuel storage infrastructure. It is also the majority shareholder of Puma Energy, a downstream petroleum products company that operates fuel stations in over a dozen African countries, including South Africa, Mozambique, Zambia, Malawi, and Tanzania. 

In addition to hydrocarbons, Trafigura is involved in the trading of minerals from Africa, particularly copper and cobalt sourced from the Democratic Republic of Congo and Zambia. These two metals are critical for the green energy transition: copper plays an important role in capturing, storing, and transporting energy from sustainable sources such as wind, solar and geothermal while cobalt is used in lithium-ion batteries to power electric cars. Trafigura expects demand for these metals to continue “to accelerate further as decarbonisation gathers pace and sales of electric vehicles rise”.

Trafigura is also investing in the transportation of African minerals to export ports. Recently, the company has become part of a consortium that signed a 30-year concession agreement for the operation and maintenance of the rail infrastructure that connects Angola's Lobito port to Luau in the eastern part of the country, near the border of the DRC. The Lobito Corridor provides a shorter route to the ocean for the DRC's metals exports. Currently, these commodities are routed through the ports of Dar es Salaam in Tanzania, Beira in Mozambique, or Durban in South Africa.

 

References

‘Trafigura in Africa’, Trafigura, 2020

‘Trafigura CEO Jeremy Weir gives keynote interview during the FT Africa Summit’, Trafigura, 16 October 2020

‘Trafigura completes Congo Republic oil loan restructuring’, Reuters, 23 March 2021

‘Green metals: Copper is the new oil’, Goldman Sachs, 13 April 2021

‘Angola commits to increasing oil and gas refining capacity’, Energy Capital and Power, 20 April 2022

‘Angola - country commercial guide’, International Trade Administration, 08 May 2022

‘Angola extends Luanda oil refinery to boost fuel production’, Africanews, 08 July 2022

‘Concession agreement signed with the Angolan government for rail services and logistics support for the Lobito corridor’, Trafigura, 09 November 2022

‘Annual report 2021’, Puma Energy, 2022

‘Sonangol announces derivative product hiring process’, Sonangol, 17 February 2023