Africa’s crude oil refining capacity has contracted, while the continent’s demand for petroleum products has surged, in the last 30 years.
The emergence of Dangote refinery has closed the gap a little, but imports will trend upwards in the foreseeable future, according to latest analyses of the S&P Global Commodity Insights.
Africa’s petroleum product demand equaled its refining capacity sometime around 2010, S&P’s data shows, but the refining capacity has plunged by 21% in 14 years, while the demand has soared. The Dangote refinery has only mitigated the widening refining gap by 9% in the last one year, the analysts’ data indicates.
S&P analysts, who conducted a semi conference featuring presentations to a wide spectrum of upstream and downstream players in Lagos, Nigeria recently, have a dim view of the likely outcomes –and expected impact-of the several proposed refineries across Africa, including three in Angola, one in Uganda, several in Nigeria and a reported megaproject planned for Ghana.
“Pace of startups and closures is a key uncertainty”, for these projects, they said. “Demand has grown faster than supply, keeping refined products markets tight and margins high”.
The only country on the continent that could handle a Mega- refinery of the scale of Dangote is South Africa, the analysts said. “Such a Mega-refinery is likely a one-off”, they argued, but they were not quite forthcoming about whether such a project could ever make it again, from ideation to construction.
“African imports will increase as demand grows through 2050”, they conclude.
By Daniil Moskalev, International Fellow, African Energy Chamber (https://EnergyChamber.org)
In recent years, the African continent has been characterized by the active commissioning of new refining capacities. However, despite this, there is a problem with the energy infrastructure on the continent, which leads to unavailability of refined products. This unavailability is both a blessing and a curse for the African continent, its people and its quest to make energy poverty history. While insufficient refining capacity creates serious challenges for domestic consumers and industry, it presents an attractive opportunity for foreign investors, many of whom have yet to fully grasp the continent’s unique advantages.
Africa: The World’s Breadbasket of Crude Oil
In 2026, the upward trend of hydrocarbon production is expected to remain positive, with the African Energy Chamber’s The State of African Energy 2026 Outlook showing that petroleum production will level at about 11.4 million barrels per day (MMboe/d), rising to about 13.6 MMboe/d by 2030. An increase in petroleum production should correspond with a rise in refining, however, ongoing capacity constraints continue to impact Africa’s refining market, leading to a reliance on imported petroleum. This impacts countries as they strive to build local industries, create jobs and develop technical expertise in the downstream sector.
Importing refined products costs African countries significantly more than processing crude oil at home, as imports involve added expenses such as shipping, insurance and other costs. With much of the continent’s refining infrastructure either obsolete or idle, there lies a critical investment opportunity for financiers and project developers.
Increased Population Mean Increased Consumption
Beyond the current challenge of importing refined products, rapidly growing domestic demand must also be considered, as it could increase Africa’s dependence on external energy supplies. Although Africa is home to 18% of the global population, it consumes less than 5% of the world’s oil products. Sub-Saharan Africa, in particular, has the lowest per capita usage, underscoring the region’s significant potential for future demand growth (according to information of our report). The expanding African market, driven by population growth and improving living standards, will provoke an increase in consumption. Anticipated demand growth offers strong prospects for new refining facilities. Investment in more advanced processing technologies can deliver higher returns for foreign investors while simultaneously meeting Africa’s urgent and growing demand for refined petroleum products.
Ongoing Challenges: The Case of Dangote
Market size and resource availability does not necessarily guarantee sufficient refining capacity. Take the Dangote oil refinery, for example. Even with its massive scale, this refinery will have only a limited effect on reducing Africa’s fast-rising import reliance. The continent will continue to face shortages of gasoline, diesel, and jet fuel over the forecast period. In the short-term, the capacity of Dangote refinery (617,000 bpd) could partially substitute foreign sources of refined products, but the prioritization of exports is more attractive for foreign investors, that’s why commissioning of new refinery plants does not address fuel accessibility challenges on the ground However, net imports for gasoline and gasoil will widen over the long-term against the backdrop of strong growth in demand and limited additions to refining capacity. Furthermore, the commissioning of the Dangote refinery is hugely significant for the Atlantic Basin’s oil trade due to export promotion, but it barely makes a dent in Africa’s growing requirement for imported refined products.
As stated in the African Energy Chamber’s Outlook 2026, gasoil net imports are projected to reach just under 1.8 million bpd by 2050, whereas gasoline net imports are forecast to exceed 1.5 million bpd. Relying on refined imports leaves countries vulnerable to global supply chain disruptions, shipping bottlenecks and sharp price swing risks that become even more severe during times of crisis. Therefore, the priority of developing domestic energy sovereignty should be to attract downstream investments to meet domestic demand.
So, we need to answer the questions: what can attract investors and what should we do? Foreign investments can be attracted if preferential financing conditions, a stable political environment, confidence in profitability and transparency of the terms of the agreements are provided. When these conditions are partially or fully met, large projects such as The Cabinda Oil Refinery or The Dangote Refinery are born..
What’s Next for African Refining
Given the scale of refining projects, mobilizing external financing is vital. There are several prerequisites to attract investment. Specifically, the availability of crude oil and access to a local domestic market. But countries need to look beyond this to strengthen regulatory frameworks; leverage public-private partnerships; simplify processes and reduce red tape; demonstrate openness to foreign investors; and be ready to meet companies’ half-way.
A Timely Opportunity for Strategic Investment
With political stabilization, the resolution of internal challenges and the establishment of a stable regulatory framework, the African refining market emerges as one of the most undervalued – and therefore potentially highly profitable – investment opportunity for global companies. An able workforce, a well-developed oil production system and growing demand are presented as outstanding incentives to attract investors to the continent. Strengthening the trust of external shareholders and investors can lead to an explosive development of the African oil refining industry. This can become one of the engines that drives African industrialization.
Distributed by APO Group on behalf of African Energy Chamber.
About Daniil Moskalev:
Daniil is a 3rd year student at the Higher School of Economics (HSE), Moscow, specializing in African and MENA studies, global economics, and international relations. He is currently working with the African Energy Chamber and has prior experience as an analyst at the Center for African Studies (HSE) and the Ministry of Industry and Trade of the Russian Federation.
By Oluwatobi Odeyinka, Staff Reporter at Headquarters
South Africa’s petrochemical giant Sasol reports that its Natref refinery has made significant progress towards achieving compliance with Clean Fuels 2 regulation through the installation of its first low carbon boiler.
“The second low carbon boiler is expected to be commissioned by the end of this month”, the company said in its latest operational update.
South Africa’s Clean Fuels 2 regulation is a national fuel specification overhaul aimed at lowering the sulphur content in both gasoline and diesel to 10 parts per million (ppm) – a dramatic reduction from the current 50 ppm and 500 ppm limits in the country. Beyond sulphur, the new standards also: Limit benzene to 1% and Cap aromatics at 35%.
Sasol’s progress on low carbon boiler installation at Natref is a pointer to how far the country’s refining sector has come around to accept the inevitability of Clean Fuels. In March 2025. Astron Energy, a unit of global commodity trader Glencor, told visiting Parliamentarians at its100,000 barrels per day crude oil refinery in Cape Town, that it would invest up to $328Million to install new equipment and become compliant with Clean Fuels 2 regulation ahead of the 2027 deadline. The company’s top officials reportedly said that the foundations had already been laid at for a Gasoline Hydrotreating Process that will help bring petrol down to Euro 5 specifications”We will be supplying compliant fuels at the date asked of us,” Thabiet Booley, the chief executive told the lawmakers.
Astron Energy is one of only two remaining crude oil refineries operating in South Africa, a country whose domestic refining capacity has halved in a space of five years to around 358,000 barrels a day, following the closure and mothballing of the two largest crude refineries in Durban; the-180,000BOPD South African Petroleum Refineries (SAPREF) jointly owned by Shell and British Petroleum, and the 120,000BOPD Engen Refinery.
Africa’s most advanced economy imports around 75% of its liquid fuel needs, which was estimated at just over 19Bllion litres in 2023, according to industry body FIASA.
South Africa currently holds less than 21 days of petroleum fuels reserve, according to s Strategic Fuel Fund, a state agency tasked with securing strategic crude oil supplies at Saldanha’s storage terminal…
What is instructive about Sasol’s Natref progress towards achieving the Clean Fuel 2, standards is that the companies that constitute the South African refining sector, including Sasol itself, were not enthusiastic about committing to investments in upgrade that the industry was required to make for Clean Fuel 2, when the regulations were announced in 2012.
Lamenting the likely inability of their refineries to recover the costs for making the necessary upgrades (in a regulated fuel price environment), they called for incentives from government to compensate for the investment.. The government refused. And the best incentive the companies were able to extract was a postponement of the CF2 implement deadline from 2017 to 2027.
In the 13 year period between the announcement of the regulations Shell, Engen, and British Petroleum had shut operations of their refineries and Chevron had sold its entire Southern African midstream and downstream petroleum assets, including the Astron refinery in Cape Town, to Swiss mining and commodity trading company, Glencore.
In June 2024, the state-owned Central Energy Fund, purchased the Shell/BP owned SAPREF refinery for R1 (five US cents) and announced plans to revamp the plant and increase its capacity. That has not happened.
Now, the news that Sasol’s Natref and Astron Energy (Glencore)’s Astron Refinery are in the process of upgrade to Clean Fuels 2 standards, mean that what remains of the country’s Refining actors have changed their disposition towards the new clean fuel specifications, from protest to assurance of compliance.
NGX listed Aradel Plc reported 42.6% increase in revenue for its refined products in the first half of 2025 compared with the revenue in 1H 2024..
The increase in income from the Ogbele refinery to ₦116.5Billion had happened despite the emergence of the mammoth 650,000Barrels per stream day (BPSD) BPSD Dangote Refinery which started operation in Lagos in February 2024.
“Ours is a captive market”, declared Gbite Falade, Aradel Plc’s Chief Executive Officer (CEO). “We are not rigid. We review our business every week and our customers have stuck with us. We have not lost anyone of them”.
There were higher sales volume of 165.3Million lltres of Diesel, Naphtha, Kerosene, Marine Diesel and Aviation fuel produced from the company’s modest, 11,000BPSD refinery, 43.1Millilon litres of products over the 122.2Million litres sold in the first half of 2024.
Out of 15,508Barrels of Oil Per Day crude output, Aradel pumped…
Support staff at NNPC’s Warri refinery, a 125,000Barrels of Oil Per Stream Day BPSD facility, have not been paid for four months, Africa Oil+Gas Report (AOGR) has learnt.
The Warri refinery is located in the western Niger Delta basin, in Nigeria’s mid-west.
Dafe Ighomitedo, the worker’s representative, told AOGR that they last received their pay for March 2025.
AOGR’s inquiry to NNPC Public Affairs Unit elicited no response.
The Nigeria Union of Petroleum and Natural Gas Workers (NUPENG), on behalf of the support staff, has issued a seven-day ultimatum to NNPC management to start talks, Ighomitedo continued.
Warri refinery was shut on January 25, 2025, having only restarted on December 30, 2024. NNPC said it had to carry out “necessary intervention works on select equipment, including field instruments that were impacting sustainable and steady operations”.
The company’s Group CEO, Bashir Bayo Ojulari, while addressing issues at a separate NNPC refinery on July 30, 2025, suggested that the Warri restart may have been “ill-informed and sub-commercial”. He had instituted a review of rehabilitation projects in NNPC refineries shortly after his appointment in April 2025. Warri saw the start of a $492Million quick-fix project in June 2022.
Casualised Warri refinery staff would not have supported the quick-fix project because of their poor terms of work, Ighomitedo told AOGR, “but in April 2022 NNPC management promised that when the refinery achieved a restart it would introduce an improved salary structure. NNPC management has not kept its promise of better pay since Warri’s restart in December 2024”, Ighomitedo continued.
NNPC refineries operated at less than 19% of their combined 445,000BOPD capacity between 2009–2019. Warri was shut in 2019 after several years of its operating losses and overhead costs attracting much criticism. NNPC responded to those criticisms partly through the casualisation of the Warri refinery workforce. Ighomitedo said that the support staff make up 69% of Warri’s workforce and have been protesting their low pay and lack of benefits since 2015.
A response from NNPC management to NUPENG is expected by 19 August 2025, Ighomitedo said.
The financing alleviates initial operational expenditures and enhances DIL’s balance sheet, supporting its continued growth trajectory.
African Export-Import Bank (Afreximbank) says it has signed a $1.35Billion financing facility in favour of Dangote Industries Limited (DIL). The facility is the largest share among participating banks, who have contributed approximately $4Billion syndicated financing arrangement for Dangote Industries Limited (DIL), Africa’s largest industrial conglomerate.
The Pan African lender acted as the Mandated Lead Arranger, for the syndication and says that its own contribution underscores its commitment to large-scale infrastructure that advances Africa’s industrialization, energy security, and intra-African trade.
“This financing— one of the largest syndicated loans in recent African financial markets—will refinance capital expended on constructing the Dangote Petroleum Refinery and Petrochemicals Complex, the biggest single-train refinery in the world with a capacity of 650,000 barrels per day”, the bank noted. The financing alleviates initial operational expenditures and enhances DIL’s balance sheet, supporting its continued growth trajectory.
A significant refinancing, of over $2.5Billion, has always been what Dangote needed, many Nigerian analysts have long concluded, watching the company operate under a tension between its debt servicing needs and its operating capital needs.
Afreximbank’s statement notes that since operations at the refinery complex began in February 2024, the bank “has continued to support the Dangote Refinery by providing key financing solutions—for crude supply and product offtake—ensuring uninterrupted operations and reinforcing its role in Africa’s most significant refining intervention”.
As Angola’s security forces mop up the remaining embers of protests against the 33% increase in fuel prices that have led to the deaths of 30 and injured 277 people, Africa’s third largest crude oil producer remains staunchly an importer of petroleum products.
In May 2025, only 5.6% of Angola’s crude oil production was refined in the country. 94.4% of the product was exported.
Like several other large African economies and petro states, Angola has made gestures at bolstering crude oil refining capacity, without much success.
The country has announced the proposed construction of five crude oil refineries in the last 20 years and has advanced dozens of deadlines for the start of the projects in that time frame.
At the World Petroleum Congress in Johannesburg in 2005, Sonangol, then the all-powerful Angolan state hydrocarbon company, informed the delegates about progress on a planned 200,000Barrels Per Stream Day (BPSD) plant, scheduled for installation in the port city of Lobito (in Western Angola), at a cost of $2Billion-$3Billion. Some 50%-60% of the Lobito plant was envisaged to be owned by foreign investors, with Sonangol allocated the remaining 40%. Ten years after, the project had rolled off to the back of the burner. The Lobito refinery was officially announced in 2002. Feasibility studies began in 2006. On November 5, 2008, Sonangol signed a pre-detailed engineering studies agreement with Kellogg, Brown and Root (KBR), followed on December 9, 2008 by a contract for management, purchasing and construction. These contracts ended up unexecuted.
In 2015, the government of José Eduardo dos Santos, announced plans for the construction of two refineries: a 100,000BPSD refinery in Soyo, at the mouth of the Congo River in the north of the country and a 400,000BPSD refinery in Bengo, a coastal city in the northwest.
Two years after, (in 2017), dos Santos also authorized the construction of a 400,000BSPD petrochemical refinery by two Russian companies: Rail Standard Service and Fortland Consulting Company, in the province of Namibe. Their joint venture called NAMREF, was to pool up to $12Billion worth of investment for a project that would also involve a railway line linking Moçâmedes with Benguela
The Bengo project was cancelled by President João Lourenço, who succeeded dos Santos. The ambitious Namibe Petrochemical project was abandoned in 2019.
The Soyo project, a partnership between Sonangol and the China International Fund (CIF) came to a brief halt after the arrest of the main shareholder Xu Jinghua, the charismatic Chinese businessman better known as “Sam Pa”. It was later revived by President Lourenço and the bid for the construction was won by a consortium led by Quanten, via international tender. Angolan authorities have declared that Soyo will be functional by 2026, but the Soyo refinery has dragged as a result of the inability of the consortium to raise the $3.5Billion for the construction.
The one project that is actively under construction is the more modest, two phase 60,000BPSD Cabinda refinery, first announced in 2017. It hasn’t reached commercial operations yet, but it has advanced closer to fruition than all the other proposals. Initially, it was to be constructed by a company named ‘United Shine’. But the bidding process through which United Shine emerged was cancelled and the project was awarded to London based investment firm Gemcorp on October 30, 2019, in an equity split of 90% to Gemcorp and 10% for Sonangol. Costs hae since escalated, from $300Mllion to $470Million to $950Million with (inclusion, now of) two gas pipelines from the refinery to the Cabinda Ocean Terminal. The original completion date for the 30,00BPSD first phase was last quarter of 2021, which then moved to the end of the 1st quarter 2022. Now the first half of 2025 has ended.
The Nigerian founded crude oil producer and petroleum products trader, AITEO, has signed an engineering, procurement, and construction (EPC) agreement to develop a 240,000 barrels of oil-per-day (BOPD) refinery in Mozambique.
The facility will be developed as a joint venture between AITEO US Corporation and Mozambique’s state-owned petroleum company, Petromoc, according to a statement by the Mozambican government. Deerfield Energy Services LLC, a U.S.-headquartered engineering firm, has been awarded the EPC contract, reflecting the project’s international scope and technical ambition, the statement notes.
The refinery is expected to launch with an initial 80,000BOPD processing train and scale up to full capacity of 240,000BOPD. The first phase is expected to be completed within 24 months. Once fully operational, the refinery will be among the largest of its kind in the Southern African Development Community (SADC), adding significant capacity to the regional energy landscape.
The statement says that the facility will use low-complexity, modular technology to speed up deployment and ensure operational stability. Its output will include gasoline, diesel, jet fuel, and naphtha, with the potential to meet local demand and support growing regional trade.
The Mozambican government has keyed into the project. Indeed, a signing ceremony marking the formal start of a strategic partnership between AITEO and the Government of Mozambique was chaired by President Daniel Chapo.
“The project reflects the administration’s efforts to attract high-impact energy investments and expand industrial infrastructure across the country”, the government noted.
The project is also aligned with Mozambique’s long-term energy strategy, which emphasizes domestic refining capacity, industrial development, and job creation. Officials say it will expand access to cleaner fuels and liquefied petroleum gas (LPG), helping address energy access and affordability — particularly in support of clean cooking initiatives.
“This EPC contract marks a defining milestone for Aiteo and Mozambique’s energy future,” said Dr. Ransome Owan, Group Managing Director for Infrastructure at AITEO. “It will reduce import reliance, create jobs, and lay the foundation for Mozambique to become a leading hub in the region’s downstream energy sector.”
The Ghanaian government’s desire to repair the Tema Oil Refinery (TOR), is hampered by legacy debt issues and a technical design glitch.
Edmund Kombat, the Acting Managing Director of the 45,000Barrelsof Oil Per Day (BOPD)Refinery, made a case for its refurbishment after a Parliamentary presentation on Monday, June 23, 2023.
The 62 year old crude oil processing plant has been shut down since 2019 as a result of poor infrastructure, debts, and inadequate crude supplies.
Kombat, a criminal & corporate attorney who was appointed to the position in May 2025, said the repairs were aimed at increasing its capacity, adding that it would save the country about $240Million in the importation of petroleum products.
“We spend $400Million every month importing refined petroleum products. When TOR is running, we will need less than 60% of that money to import refined petroleum products because our nameplate capacity is 45,000 barrels and we recently installed a new furnace. With that new furnace, we can actually do 60,000 barrels and nationally, we consume about 100,000 barrels per stream day, every single day.”
But how does Mr, Kombat disentangle the huge debt hanging over the dormant, state-owned refinery to access the $300Million he needs for the repairs? Several reports of Ghana’s midstream hydrocarbon industry conclude that TOR Refinery’s over $500 Million debt comprises trade arrears, legacy obligations as well as recent reclassifications of grants to loans in an agreement between Ghana and the International Monetary Fund (IMF).
Ghana has little refining capacity; a growing set of modular refineries are not transparent about how much crude they are processing, let alone products they deliver.
Ghana exports most of the crude oil produced from its three oil fields — Jubilee, TEN, and SGN, and imports refined petroleum products to meet its domestic fuel needs.
The country produces about 140,000BOPD from the three fields, but it also imports crude oil, especially to supplement gas at its power generation plants.
As the country’s domestic fuel demand grows, it desires a return of its refinery in order to reduce its heavy dependency on imported petroleum products.
Hence, the present administration’s commitment to revamping the state-owned refinery. But there is an elephant in the room, which even the government has failed to acknowledge. TOR cannot refine Ghana’s premium crude oil.
The hydroskimming plant at the Tema Oil Refinery was not designed to process the light sweet crude oil from Ghana’s oil fields. When it was functional, it processed heavier crude oil and produced low-quality residual fuels.
Therefore, the repair of TOR may not rescue Ghana from the heavy importation of refined products that it wishes to address, and it would also not refine the barrels of crude oil produced from its fields, if it wants to maximize their value.
I read with interest Dimeji Bassir’s recent article, “Why are NNPC Owned Refineries Stuck in a Vortex of Failures?” published in Africa Oil+Gas Report. The author presents a sobering, data-driven analysis of the chronic underperformance of Nigeria’s state-owned refineries. I appreciate the attention to transparency, accountability, and technical rigor. However, I believe the discussion would benefit from a broader contextual lens and recognition of recent progress and ongoing reforms.
Recognizing Recent Progress
While the article rightly highlights decades of inefficiency and financial losses, it is important to acknowledge that the current NNPC leadership has taken unprecedented steps towards transparency and operational reform. The publication of audited financial statements, the unbundling of NNPC into a limited liability company, and increased stakeholder engagement mark significant departures from past opacity. These reforms are not panaceas, but they lay a critical foundation for sustainable change.
The Political Economy: A Complex Web
The article touches on corruption and inefficiency but does not fully explore the entrenched political and economic factors that have historically hampered refinery performance. Issues such as fuel subsidies, regulatory bottlenecks, and vested interests are not unique to Nigeria’s oil sector; they are systemic challenges that require coordinated policy responses beyond technical fixes. Any sustainable solution must address these broader governance and market dynamics.
Technical Solutions Are Necessary, But Not Sufficient
The call for a comprehensive technical assessment and adoption of best practices is well-taken. However, technical solutions must be integrated with institutional reforms, capacity building, and workforce engagement. The human factor—training, motivation, and accountability of refinery staff—cannot be overlooked. Moreover, the global energy landscape is shifting towards renewables, and Nigeria must consider how its refining strategy aligns with long-term energy transition goals.
The Role of Private and Modular Refineries
The article briefly mentions the Dangote Refinery and modular refineries but underestimates their transformative potential. Private sector participation can introduce competition, innovation, and efficiency that have eluded state-run enterprises. The government’s support for modular refineries, if properly regulated and incentivized, can help bridge the supply gap and reduce dependence on imports.
Socioeconomic and Public Health Dimensions
Finally, the failures of the refining sector have far-reaching consequences for public health, employment, and national security. Fuel scarcity, inflation, and environmental degradation directly affect the well-being of ordinary Nigerians. Reforming the sector is not merely an economic imperative—it is a public health and social justice issue.
Conclusion
In summary, while the article offers a compelling critique of past and present challenges, a holistic approach is needed. Nigeria’s refining sector requires not only technical and managerial reforms, but also systemic changes in governance, policy, and market structure. Progress is being made, albeit slowly, and stakeholders must build on these foundations with patience, pragmatism, and a shared vision for national development.
Ehimario Igumbor, Professor of Public Health and keen student of the political economy of Nigeria’s development.
“Pace of startups and closures is a key uncertainty”, for these projects, they said. “Demand has grown faster than supply, keeping refined products markets tight and margins high”.
