The appetite for petroleum product imports remains strong in Africa despite initial optimism that local refineries would enhance energy security. With a growing population and global trade disruptions, KINGSLEY JEREMIAH writes on the need for the continent’s leaders to reconsider their approach.
Africa boasts of vast oil reserves — estimated conservatively at 120 billion barrels by the African Petroleum Producers’ Organisation (APPO). Yet, its refining capacity remains woefully inadequate.
Last year, the continent’s oil demand exceeded 200 million metric tonnes (approximately 4.4 million barrels per day), while refining output languished at just 83 million metric tonnes by 2023, down from a peak of 120 million metric tonnes in 2010. This gap forces Africa to import an estimated $30 billion value of petroleum products yearly.
As Africa’s population surges and its energy demands escalate, the continent’s petroleum refining and distribution sectors face mounting challenges that threaten energy security and economic development. Now that the rest of the world is thinking more about localisation instead of globalisation, there could be more problems for the already stretched continent to deal with.
Earlier this week, when energy, finance and policymakers gathered at the African Refiners and Distributors Association (ARDA) Week 2025 in Cape Town, there was an urgent call to place Africa first. But the road to that destination could be longer than imagined.
The commissioning of Nigeria’s Dangote Refinery, with its 650,000-barrel-per-day capacity, marks a turning point, boosting output in 2024. Projections suggest that by 2026, Africa could achieve record-high refining levels if additional facilities come on board.
However, as ARDA Executive Secretary Anibor Kragha pointed out, “If Congo Brazzaville is reaching 500,000 barrels per day in production, but Pointe-Noire’s refining capacity is only 24,000 barrels per day, how do we bridge that gap?” The answer, he stressed, lies in significant downstream investment.
Sub-Saharan Africa suffers from a stark mismatch between production and refining. With only two crude refineries and a coal-to-liquid plant operational in South Africa, the region meets just 15 per cent of its clean product demand domestically.
By 2045, import dependency is expected to deepen, with Sub-Saharan Africa projected to require an additional 26 million metric tonnes of petroleum products yearly, driven largely by gasoil shortages.
Beyond refining, distribution inefficiencies plague the continent. Shallow port drafts, congested berths, and inadequate storage capacity force 80 per cent of oil product distribution in Sub-Saharan Africa to rely on road transport via trucks, rather than more efficient pipelines or railways.
This reliance adds $20–$30 per metric tonne to fuel costs, a burden ultimately borne by consumers, as Kragha noted.
Less than six per cent of coastal storage facilities offer world-scale capacity, limiting economies of scale and exacerbating supply disruptions.
Recent infrastructure projects, such as Angola’s 582,000-cubic-metre Sonangol ocean terminal and Senegal’s new storage depot in Dakar, signal progress, but the scale of investment required remains daunting.
The International Energy Agency (IEA) forecasts a 70 per cent increase in Africa’s energy consumption over the next two decades, necessitating annual investments of $25 billion to achieve universal energy access by 2030. Sahara Group’s Bethel Obioma emphasised the need for “strong partnerships between governments, private sector players, and development agencies” to unlock these funds.
Historically, Africa has depended on external funding for energy projects, but as global financiers pivot away from oil and gas, the continent faces a funding crisis.
Chairman of the African Energy Chamber, NJ Ayuk, highlighted a $15.7 billion shortfall in energy infrastructure investment, warning that “capital goes where it’s welcome”.
The Africa Energy Bank, a joint initiative by APPO and Afreximbank, aims to address this by raising $5 billion in African-led capital, with a focus on oil and gas projects shunned by external investors.
Regulatory barriers further complicate the picture. High taxes and restrictive trade policies hinder intra-African energy trade, a point Ayuk passionately raised: “You can send crude and LPG across borders, but an African holding an African passport can’t move freely.”
Foreign exchange shortages and bureaucratic delays –such as the eight-week wait for bank transfers in the CEMAC region – have cost the continent $45 billion in lost investment and $86 billion in government revenues, Ayuk argued.
Currently, over 600 million Africans lack access to electricity, and one billion in Sub-Saharan Africa rely on biomass like firewood and charcoal for cooking.
This dependency not only drives deforestation and health crises but also stalls progress towards clean cooking targets, which require $4 billion annually until 2030, according to ARDA estimates. While liquefied petroleum gas (LPG) offers a viable alternative, financial constraints have slowed its adoption, leaving 80 per cent of Africans tethered to traditional fuels.
Head of Trade Finance at Sahara Energy, Nathalie Musson-Genon, advocated for investments to meet future demand.
APPO’s Omar Farouk outlined a three-pronged strategy that looked at integrating African energy markets, investing in local technology, and securing independent financing.
ARDA President, Mustapha Abdul-Hamid called for “Afrocentric solutions.”
Projects like the Central African Pipeline System (CAPS) and Afreximbank’s $4 billion investment in Nigeria’s refining capacity exemplify this shift towards self-reliance.
Yet, the road ahead is fraught with complexity. Balancing industrialisation with climate commitments, as Africa’s carbon emissions rise with growth, adds another layer of difficulty. Natural gas, championed as a stable base-load fuel, is being projected as a bridge, but innovative solutions like biofuels and sustainable aviation fuel are also gaining traction.
