West Africa/Europe: Toxic Fuels for African Markets

AfricaFocus Bulletin
October 4, 2016 (161004)
(Reposted from sources cited below)

Editor’s Note

European commodity trading companies in Switzerland, using petroleum
‘blending’ plants in the Netherlands and Belgium, are exporting
toxic fuels to Africa in large quantity. “Their business model,”
according to a new report from the Swiss organization Public Eye,
“relies on an illegitimate strategy of deliberately lowering the
quality of fuels in order to increase their profits. Using a common
industry practice called blending, trading companies mix cheap but
toxic intermediate petroleum products to make what the industry
calls ‘African Quality’ fuels.”

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The findings come from a three-year study by Public Eye (formerly
the Berne Declaration), in which researchers collected and analyzed
samples of fuel from petrol stations in eight countries: Angola,
Benin, the Republic of the Congo, Ghana, Côte d’Ivoire, Mali,
Senegal and Zambia. The problem is particularly intense in West
Africa, which imports half its refined petroleum products despite
being a significant producer of crude oil.

The full 164-page investigative report is available on the Public
Eye website (https://www.publiceye.ch/en/campaigns/dirtydiesel/),
with extensive background material, audiovisual resources, and a
petition targeting the key Swiss companies involved, linked to
campaigns in the West African countries affected. This AfricaFocus
Bulletin contains excerpts, including the executive summary.

The fuels exported from the “ARA Hub” of Amsterdam, Rotterdam, and
Antwerp, which supplies approximately half of fuel exports to West
Africa, include diesel with sulphur content “at least 100 times the
European standard.”

The Public Eye campaign in Switzerland, called “Return to Sender,”
calls for African governments to set stringent fuel quality
standards, for Swiss trading companies to stop abusing the current
weak standards, and for European governments to prohibit the export
of any health-damaging fuels that would not be allowed under their
own domestic standards. See, in particular, the short video and
other resources at
https://www.dirtydiesel.ch/en/campaign/?section=intro

This expose of trade in “African Quality” fuels is one of the most
dramatic illustrations of structural environmental racism at the
international level. It is also a clear illustration of why
combating such abuses effectively requires an international
response.

For previous AfricaFocus Bulletins on environmental issues, visit
http://www.africafocus.org/intro-env.php

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Dirty Diesel. How Swiss Traders Flood Africa with Toxic Fuels

A Public Eye Investigation, September 2016.

http://www.publiceye.ch

by Marc Guéniat, Marietta Harjono, Andreas Missbach, Gian-Valentino
Viredaz

[Public Eye (formerly the Berne Declaration) is a non-profit,
independent Swiss organisation with around 25,000 members. Public
Eye has been campaigning for more equitable relations between
Switzerland and underprivileged countries for more than forty years.
Among its most important concerns are the global safeguarding of
human rights, the socially and ecologically responsible conduct of
business enterprises and the promotion of fair economic relations.]

Executive summary

Swiss commodity trading companies take advantage of weak fuel
standards in Africa to produce, deliver and sell diesel and
gasoline, which is damaging to people’s health. Their business model
relies on an illegitimate strategy of deliberately lowering the
quality of fuels in order to increase their profits. Using a common
industry practice called blending, trading companies mix cheap but
toxic intermediate petroleum products to make what the industry
calls “African Quality” fuels. These intermediate products contain
high levels of sulphur as well as other toxic substances such as
benzene and aromatics. By selling such fuels at the pump in Africa,
the traders increase outdoor air pollution, causing respiratory
disease and premature death. This affects West Africa, in
particular, because this is the region where the authorised levels
of sulphur in fuels remain very high. West Africa does not have the
refining capacity to produce enough gasoline and diesel for its own
consumption, and so it must import the majority of its fuels from
Europe and the US, where fuel standards are strict.

Fuels have been on the agenda for some time already. Beginning in
2002, the UN Environmental Programme (UNEP) conducted a ten-year
campaign that led in most countries to a ban on lead in gasoline.
However, fuels still account for other severe health issues. The
issue of sulphur content must be urgently addressed.

This report is the result of three years of research by Public Eye
(formerly the Berne Declaration). It highlights the contribution by
the commodity trading industry to outdoor air pollution in Africa
and the related health effects.

The Issue: Sulphur, A Ticking Bomb that Needs Defusing

African mega-cities such as Lagos or Dakar already have worse air
quality than Beijing. Rapid urbanisation, the growing numbers of
cars, and the poor quality of these cars, which are mostly second
hand, partly explains the worsening air pollution in African cities.

The crucial factor though is that most African countries still
permit the use of high-sulphur diesel and gasoline. On average,
African sulphur limits in diesel are 200 times above the European
limit, in some countries this figure is as high as 1,000.

Sulphur in fuels is crucial to air pollution because of its direct
health-damaging effects but also because it destroys emissions
control technologies in vehicles. As long as fuel sulphur content
remains so high, any efforts to reduce air pollution (for example,
by modernising Africa’s car fleet) will be in vain. Without rapid
and meaningful improvements in fuel quality, traffic-related air
pollution will soon be a major health issue (see chapter 3).
Respiratory diseases such as asthma, chronic obstructive lung
diseases, lung cancer and cardiovascular diseases will rise.

On the other hand the use of ultra-low sulphur fuels (10 parts per
million [ppm] sulphur) would immediately halve the emissions of
pollutants. If done together with the introduction of cars that use
existing emissions control technologies, the emission of pollutants
could be reduced by 99 percent.

The Players: The Swiss Trading Companies

The fuel business in Africa is very opaque. Over the past decade,
important shifts have happened, almost unnoticed. As oil majors
pulled out from Africa’s retail business, Swiss trading companies
moved in, expanding downstream to control key as sets such as
storage facilities and hundreds of petrol stations across Africa
(see chapter 4). Hidden from view by operating behind the Shell and
Puma Energy brands, two big Swiss trading companies Vitol and
Trafigura, together with smaller Swiss companies, have a dominant
position in the import and distribution of petroleum products in
many African countries, especially in West Africa. Other
heavyweights, namely Glencore, Mercuria and Gunvor, that don’t own
petrol station networks, are equally important in supplying African
markets. To access markets and increase their market share, they
often rely on dodgy local door-openers or other politically exposed
persons (see chapter 5).

The Test: Sampling at the Pump

Public Eye tested fuels sold at the pump by Swiss trading companies
(see chapter 6). Countries were selected based on their weak fuel
standards and on the presence of petrol stations owned by Swiss
trading companies. We analysed samples from eight coun tries:
Angola, Benin, the Republic of the Congo, Ghana, Côte d’Ivoire,
Mali, Senegal and Zambia. The trading companies sampled were
Trafigura (operating through Puma, Pumangol, Gazelle trading, UBI),
Vitol (Vivo Energy with Shell brand), Addax & Oryx Group (Oryx) and
Lynx Energy (X-Oil).

More than two thirds of the diesel samples (17 out of 25) had a
sulphur level higher than 1,500 ppm, which is 150 times the European
limit of 10 ppm. The highest level of sulphur was in a diesel sample
from one of Oryx’s petrol stations in Mali, where the sulphur
content was 3,780 ppm. Almost half of the gasoline samples (10 out
of 22) have a sulphur level between 15 and 72 times the European
limit of 10 ppm. Worryingly, we also detected other health damaging
substances in concentrations that would never be allowed in a
European or US fuel. These substances include polyaromatics
(diesel), aromatics and benzene (gasoline). In a number of samples,
we found traces of metals that would also contribute to higher
emissions of pollutants and damage car engines too.

The Context: Toxic Fuels Brought to Africa

West Africa is a significant producer of crude oil. But due to its
lack of refining capacity, the region must import roughly half of
its diesel and gasoline, which is high in sulphur, mostly from
Europe and the US.

Around 50 percent of the fuels imported to West Africa come from
Amsterdam, Rotterdam and Antwerp, collectively known as the “ARA”
region (see chapter 8). Trade statistics show 80 percent of the
diesel exported from ARA to Africa has sulphur content at least 100
times above the European standard. This figure soared to an average
90 percent for West Africa, with Ghana (93 percent), Guinea (100
percent), Senegal (82 percent), Nigeria (84 percent) and Togo (96
percent) receiving the biggest volumes.

Based on specific cargoes, official documents from Ghana show that,
in both 2013 and 2014, diesel imports contained sul phur levels
extremely close to the legal limit. This all happened even as
specifications were changed between 2013 and 2014. This shows how
trading companies are able quickly to adapt to new standards,
sticking as close as possible to the limit (see chapter 7). Swiss
trading companies play a major role in transporting fuel from the
ARA region, and from the US, to West Africa. In the case of Ghana,
these companies delivered most of the known high sulphur cargoes in
2013 and 2014.

The Business: Blending Fuels

Contrary to what most people might think, fuels such as diesel or
gasoline tend not to come straight from refineries. Instead, the
refineries produce intermediate products, which are then mixed
together, occasionally with intermediate products from other sources
(such as the chemical industry). This process is called “blending”
(see chapter 9). To make matters more com plex, different types of
refineries produce different intermediate products or “blendstocks”.

Gasoline is always a blended product because vehicle engines require
a particular mix, which usually consists of between six and ten
blendstocks. By contrast, diesel does not need to be blended.
However, since blending is a profitable activity and since
refineries do not produce enough diesel by them selves, diesel is
also blended. It usually consists of between four and six
blendstocks.

Blending does not require a huge infrastructure. A few pipes and
tanks are usually enough to prepare a specific blend of diesel or
gasoline. It can be done in tank terminals, onboard ships, or at the
interface between the two while still in port.

Having become giants with revenues of hundreds of billions of
dollars, Swiss commodity trading companies have more oil tankers at
sea and own more storage capacity than the oil majors. Storage
capacity is key not only to trading but also to blending.

The Illegitimate Business: Making “African Quality” Fuels

As trading companies (and other blenders) explain, they “tailor”
fuels to meet the standards of the country they supply. They call
this blending “on-spec”, or according to required specifications.
This can refer to the required specification of sulphur content, or
to the content of any other regulated substances, such as ben zene
or aromatics.

Differences between national fuel quality regulations offer
opportunity for companies to profit from a form of regulatory
arbitrage. With weak standards, Africa is an excellent example. And
industry uses the term “African Quality” (see chapter 10) when
referring to low-quality fuels, characterised primarily by their
high sulphur content, although the term also refers to fuels with
other low-quality aspects.

Africa’s weak fuel standards allow traders to use cheap blendstocks,
dropping production costs and making the produc tion of low fuels a
lucrative business model.

These cheap blendstocks are also of poor quality and, most
importantly, they damage health through their high levels of
sulphur, aromatics and benzene. Such blendstocks could never be used
in European or American markets. Sometimes fuels also contain waste
and recycled blendstocks from the chemical industry and elsewhere,
posing additional risks.

Traders and other blenders, who have a below specification petroleum
product on their hands, will search the market for other blendstocks
(nicknamed “tasty juices”) that will enable the production of an on-
spec fuel. The closer to the specifica tion boundary the product
lies, the larger the potential margin for the trader. On the other
hand, if the trader has a product that is above the specification,
then it may be able to purchase cheap, low-quality “juices” to blend
in. The process of lowering product quality is known in the industry
as “filling up quality give-away”.

In principle, blending is a legitimate and necessary technical
process, but there is a large margin for abuse when it comes to
blending low-quality blendstocks – a practice we call “blend
dumping”. We consider this to be an illegitimate practice. Con
taminants present in any blendstock, such as sulphur and benzene,
should be minimised or fully eliminated by further refining, not
diluted to meet the weak standards of African countries.

The Hub: Where African Quality Fuels Are Produced

While African Quality fuels could never be legally sold in Europe,
they are produced in Europe nevertheless. The ARA region has become
the main hub for the blending and shipping of fuels, especially
diesel, to West Africa for a number of reasons, includ ing its
extensive refining and blending capacity, its strategic po sition
(which allows it to receive petroleum products and blend stocks from
the UK, Russia and the Baltic countries), and its geographic
proximity to West Africa (see chapter 11). The Swiss trading
companies own or hire extensive blending facilities in ARA and we
can prove for the first time that they dominate the export of
African Quality fuels to West Africa.

Besides Europe, the blending is also done offshore the West African
coast. Most West African ports are too small to receive a large
number of tankers or have limited draft, which prevents the larger
European tankers from entering. Mostly coming from the ARA region,
these oil product tankers sail across the Atlan tic Ocean and meet
in the Gulf of Guinea. Mostly in Togolese waters, they transfer
petroleum products from one vessel to an other in an operation known
as ship-to-ship (STS) transfer. The usually smaller tankers then
sail off, discharging the products to different countries in the
region. These STS operations are also a common way to blend
products.

The Conclusion: Ban All Dirty Fuels

Now is the time for African governments to act. They have the chance
to protect the health of their urban population, reduce car
maintenance costs, and spend their health budgets on other pressing
health issues. By moving to ultra-low sulphur diesel, Africa could
prevent 25,000 premature deaths in 2030 and al most 100,000
premature deaths in 2050. An examination of past experience, the
price structure of diesel, and recent developments on the continent
show that African leaders shouldn’t fear significant price increases
from improving the standards of fuel (see concluding chapter 12). In
January 2015, for example, five East African countries adopted low
sulphur fuels with no impact on prices at the pump, or on government
spending through subsidies. A limited increase of prices at the pump
should in any case be balanced with the health and associated
savings of reducing air pollution from high sulphur fuels. The
savings from better health are by far higher than the effects of the
potential costs of cleaner fuels.

Four different sets of actors should take decisive steps
immediately:

* African governments (and others with weak fuel standards) should
set stringent fuel quality standards of 10 ppm sulphur for diesel
and gasoline, and introduce European limits on other health damaging
substances. Whether or not they have sufficient refining capacity in
the country or can only import, governments should be strict with
implementing fuel standards. If not, their fuels will quickly
contain bad blendstocks. The blenders know exactly which standards
apply where, and how best they can dump their African Quality
blends.

* Swiss trading companies should stop abusing Africa’s low fuel
quality standards, recognize that if left unchanged their practices
will kill more and more people across the continent, and immediately
produce and sell to African countries only fuels that would meet
Europe’s high fuel quality standards.

* Governments of export hubs for African fuels (such as Amsterdam,
Antwerp or the US Gulf) should prohibit the export of any health
damaging fuels or blendstocks, which would never be used in their
own country.

* The Swiss government should implement mandatory human rights and
environmental due diligence requirements for Swiss companies,
covering the entire supply chain and including potentially toxic
products.

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