African Refining: A promising yet unexploited investment opportunity

With greater political stability, progress in addressing internal challenges and the development of stronger regulatory frameworks, Africa’s refining market stands out as one of the world’s most undervalued – and therefore potentially highly profitable – investment opportunities.In recent years, new refining capacity has been commissioned across the continent, yet energy infrastructure remains weak. This has created a paradox: Africa is rich in crude oil but dependent on imports of refined petroleum. While this raises costs for governments, businesses and consumers, it also highlights the scale of the opportunity for investors willing to enter the market.The State of African Energy 2026 Outlook by the African Energy Chamber projects petroleum production to stabilise at 11.4 million barrels per day (MMboe/d) in 2026, rising to 13.6 MMboe/d by 2030. Logically, refining should expand in parallel, but capacity constraints continue to hamper progress. Imports not only inflate costs through shipping and insurance but also undermine industrial development, job creation and technical expertise in the downstream sector.Demand on the riseAfrica accounts for 18% of the world’s population, yet consumes less than 5% of global oil products. Sub-Saharan Africa has the lowest per-capita usage, which signals huge growth potential as populations expand and living standards improve. Demand for refined products is expected to accelerate, making new refining facilities not only viable but essential.For foreign investors, this growing market offers attractive prospects, particularly if investments are directed towards modern, efficient refining technologies. Such projects promise both strong returns and a chance to meet Africa’s urgent energy needs.The Dangote exampleThe commissioning of Nigeria’s Dangote refinery – with a capacity of 617,000 barrels per day – illustrates both progress and persistent challenges. While the facility may substitute a portion of Africa’s import needs, its prioritisation of exports means the continent will continue to face shortages of petrol, diesel and jet fuel.According to the African Energy Chamber, net imports of gasoil could reach 1.8 million barrels per day by 2050, while gasoline imports may exceed 1.5 million barrels per day. This dependence exposes countries to global supply chain disruptions, shipping bottlenecks and volatile price swings. To achieve energy sovereignty, Africa must attract more downstream investment to meet domestic demand.Creating the right conditionsFor investors, key incentives include preferential financing, political stability, profitability guarantees and transparent agreements. Where these conditions exist, projects such as the Cabinda and Dangote refineries have been possible. Looking ahead, governments must strengthen regulatory frameworks, streamline processes, promote public-private partnerships, and actively demonstrate openness to international investors.A strategic opportunityAfrica’s refining sector offers global companies a timely and strategic investment opportunity. The continent combines abundant crude oil reserves, a capable workforce, established upstream production and rising consumer demand. With trust from external stakeholders and decisive policy support, the refining industry could become a driving force of African industrialisation and a decisive step in reducing energy poverty. – Distributed by APO on behalf of the Africa Energy Chamber.

African Refining: A promising yet unexploited investment opportunity

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Republikein 2025-09-23

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African Refining: A promising yet unexploited investment opportunity

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Republikein 2025-09-23

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