Emerging as an Integrated Pan-African Energy Player
Read more exclusive interviews with African independents in the upcoming publication, “African Energy Road to Recovery: How the African Energy Industry Can Reshape Itself for a Post-COVID-19 Comeback,” developed in partnership between the African Energy Chamber (AEC) and Africa Oil & Power. Released in January 2021, the 200-page report maps out the productive recovery of the African energy sector, drawing upon the strength of the AEC’s thought leadership.
Robert Mdeza, CEO of Trinity Energy spoke to Africa Oil & Power about how Trinity Energy is currently spearheading the construction of a 40,000-barrel per day refinery to enhance regional energy security and foster intra-African trade of petroleum products.
Can you please provide an overview of Trinity Energy’s business priorities and milestones in 2020 and going forward into 2021?
2020 has been a challenging year due to the obvious challenges presented by the COVID-19 pandemic. For Trinity Energy, besides the shutdowns in our main market of South Sudan, there were also significant logistical challenges in importing petroleum products in South Sudan due to border shutdowns during the pandemic. This is because we source the majority of our refined product supplies from the surrounding East African markets and truck them to our storage depot in Juba for domestic distribution.
This notwithstanding, our business has continued to make tangible steps in various areas towards our ambition of becoming an integrated pan-African energy player. Apart from that, this year we have been able to reach two key milestones; having attained the ISO 9001:2015 Certification and joining the U.N. Global Compact initiative, becoming the first indigenous South Sudanese company to achieve these two milestones. These two achievements will define our journey moving forward, giving greater focus to enhancing standards of our offering to our customers, but also injecting more sustainable practices in our business.
How has the business managed uncertainty and disruption during the COVID-19 crisis and have any opportunities emerged for Trinity Energy?
While the COVID-19 pandemic has definitely impacted our business, the supply disruptions brought about by the delays in the borders with our neighboring countries has reaffirmed the need for a refinery in South Sudan to ensure our security of supply. We are therefore even more motivated to see through our refinery project.
During the crisis, we took a precautionary measure to fill up our storage tanks with fuel stocks, and this was instrumental in cushioning us from major supply disruptions. This situation has also reaffirmed one of our key focus areas, which is investing in storage terminals across South Sudan.
The crisis has also helped shape our Corporate Social Investment (CSI) agenda moving forward through giving greater focus to health-related initiatives.
Please could you provide an overview of the refinery project for our readership? How has COVID-19 affected the initial stages of this project specifically?
South Sudan has the third-largest oil reserves in Africa. With that in mind, Trinity Energy is working to build a 40,000-barrel per day (bpd) refinery, with the potential to expand this to 200,000 bpd. Our regional expansion will immediately focus on neighboring countries such as Ethiopia, Eastern Democratic Republic of the Congo, and the Central African Republic, which like us, are all landlocked countries that require energy security to support economic growth and future developmental activities.
The refinery project is firmly on course. We have already secured the land, undertaken the feasibility studies, testing of the crude, environmental studies and are now about to commence on Front-End Engineering Design (FEED) study. The FEED will pave the way for fully engaging with financiers for the project since a number of financiers have already expressed interest in the project.
While some of the foundational work had already taken place as mentioned above, progress has been hampered by the COVID-19-related travel restrictions. This is particularly more for the project consultants who have to travel into the country from other parts of the world. We are optimistic, however, with the easing of the travel restrictions that we will be able to put the project back on schedule for completion and commissioning by 2023.
Are there any changes on an industry-wide basis that Trinity would advocate for, in order to make it easier to finance and build projects such as this?
As a pan-African focused company, we would want to see more intra-African trade taking place. That Africa is an immensely rich continent goes without saying. What is lacking in Africa, however, is a strong policy and framework for intra-African trade, which enables our countries to complement each other based on the respective wealth and positioning of each country.
We have taken it upon ourselves to position our refinery project as not only a South Sudan project, but also a regional project that will be instrumental in helping to secure energy supply particularly for our landlocked neighbors, such as Ethiopia and Central African Republic. While we continue to receive significant support from the African Export-Import Bank, we would also want to see more African financiers teaming up to support these large investments in Africa. This will be one of the ways in which we shall become self-sustaining as a continent and also harness our significant wealth and resources as a continent.
In what ways do you think COVID-19 will leave a lasting impact on the energy industry in Africa?
Needless to say, COVID-19 has impacted demand for petroleum products in Africa just as has been the case globally. It has also impacted several projects within the energy sector, including our own refinery project as stated above.
That said, while demand for petroleum products may be impacted by the pandemic in the immediate short term, we can expect to continue seeing demand for petroleum products continuing to rise in Africa even in the long term. This growth will continue being fueled by a rapidly growing middle class and population, as well as programs by governments to systematically address energy access challenges. This is counter to the projected medium-term peaking of demand for petroleum products in the developed parts of the world.
The real impact will, however, come in the investment in new oil exploration projects in Africa following the projected peaking in demand in the developed parts of the world, as well as reduced CapEx budgets of the oil majors as they focus more on renewable projects. We may therefore see reducing investment in oil projects in Africa moving forward.
What are the key opportunities you see emerging in 2021 in South Sudan and in the African energy industry in general?
COVID-19 in some ways has given momentum to the transition towards lower carbon energy sources. We have seen oil majors like Total, Shell and BP announce major changes in the last couple of months towards the shift to renewable energy.
Africa sits in a vantage position to leapfrog this energy transition given the blessing of wind and solar, which are the two main ingredients for these renewable energy sources. Therefore, we see a growing interest in renewable projects in Africa. Could we see Africa, for example, leapfrog the world when it comes to embracing renewable technologies as it did for the mobile technology? Time will tell.
As Trinity Energy, however, we are positioning ourselves to be a key player in the South Sudan energy sector as an integrated energy player. Besides our investments in the oil sector, we are also investing in power generation to meet the energy needs of the people of South Sudan.
On a continental scale, what are the trends that you believe will stimulate the post-COVID-19 energy sector and broader economic recovery? How do you believe the energy industry will change for the better as a result of this period?
The shift to renewable energy, even for Africa, will be a defining trend post-COVID-19. Nowhere else is the whole issue of energy access more urgent than in Africa. As a continent, we must therefore make the effort to attract investors to invest in this sector.
Governments must also facilitate indigenous African companies such as Trinity Energy to stimulate this investment in the renewable energy space. This is, for example, through investment and capital deductions, as well as flexible tariff structures that enable companies like ours that are investing in the future of the continent to play a key role in enhancing energy access for our people.
What would be your message to international investors looking at South Sudan in 2021?
While the South Sudan civil conflict has jeopardized business and destabilized the economy, the 2018 peace agreement, which culminated in the coming into place of the Government of National Unity in February 2020, has ushered a period of peace and great optimism in the business community within South Sudan. We are also beginning to see foreign investors beginning to make forays back into the country. South Sudan is therefore ripe for business. We see opportunities everywhere besides the extractive sector, which has been the mainstay for the economy since independence.
It is important to remember that besides having the third-largest oil reserves in Africa, South Sudan is the only oil producing country in East Africa. The Government is keen to restore production from the current 160,000 bpd to the pre-civil conflict level of 350,000 bpd. There will be a lot of work therefore within the oilfields to restore production, and we are beginning to see the operating companies already issuing work programs in this direction for implementation in 2021 and beyond. The Government also plans to issue new oil prospecting licenses in 2021, an opportunity that investors looking at proven oil projects in East Africa should find interesting.
Engage with the country’s oil sector opportunities firsthand at South Sudan Oil & Power 2021 – the nation’s flagship energy conference that will dictate the future of investment and development in the country. Click here to register.
Trinity Energy is an independent energy company based in South Sudan’s capital, Juba. Started in 2012, Trinity Energy has become the nation’s largest private energy company. Serving over 25,000 customers a month, Trinity Energy has the largest retail petroleum footprint in South Sudan, supporting clients with nation-wide fuel and energy services that include fuel delivery, bulk fuel supply and onsite fueling solutions.