Onome Amuge

Africa is embarking on one of its most ambitious downstream expansions in decades, with plans to add 1.2 million barrels per day (bpd) of new refining capacity by 2030 with at least $100 billion investments by 2050, according to OPEC’s latest World Oil Outlook. The drive, spearheaded by Nigeria, Angola and Uganda, is projected to mark a decisive shift in the continent’s energy fortunes if entrenched governance weaknesses, policy instability and financing gaps do not derail progress.

For decades, Africa has been home to vast oil reserves, yet heavily reliant on imported refined petroleum products. This dependency has drained foreign exchange, widened trade deficits, and left economies exposed to price shocks. Now, with domestic oil demand forecast to more than double from 1.8 million bpd in 2024 to 4.5 million bpd by 2050, the case for refining capacity stands as not just commercial but existential.

“The continent is at a turning point. Africa can no longer afford to be just a crude exporter. Refining expansion is essential for energy security, investment competitiveness and long-term growth,”OPEC noted in its 2025 outlook. 

Dangote and the new refining order

At the heart of this development stands Nigeria’s 650,000-bpd Dangote Refinery, the single largest refining complex in Africa, which began operations in 2024. Built on the outskirts of Lagos at a cost of more than $19 billion, the project is already reshaping regional fuel markets, cutting import bills and altering trade flows across West Africa.

Beyond Dangote, Nigeria is pushing ahead with the 200,000-bpd Akwa Ibom Refinery and several modular projects designed to scale up incrementally. 

Elsewhere, Angola, Africa’s second-largest oil producer, is advancing the 200,000-bpd Lobito Refinery and the 100,000-bpd Soyo plant, both due by 2030. Uganda, seeking to unlock its Lake Albert basin reserves, is backing a 60,000-bpd refinery in Hoima. North Africa is also active, with Algeria, Libya and Egypt pushing projects to cut import reliance and capture greater margins domestically.

OPEC estimates Africa will need $40 billion in refinery investments by 2030, rising to more than $100 billion by 2050 to fund construction, modernisation and secondary processing upgrades. That spending requirement places the continent squarely in the sights of sovereign wealth funds, private equity and institutional investors, many of whom will gather in Cape Town this October for African Energy Week (AEW), a showcase for deal-making in the sector.

However, analysts assert that mobilising capital for downstream projects in Africa is easier said than done. This is as refineries are notoriously expensive, politically exposed and environmentally controversial. Global lenders are increasingly wary of long-term hydrocarbon projects, especially as the energy transition accelerates.

This is where Africa’s refinery push runs into its old nemeses of governance, policy inconsistency and political interference.

Nigeria’s troubled state refineries

Nowhere are these challenges more evident than in Nigeria, whose state-owned refineries in Port Harcourt, Warri and Kaduna have long been symbols of dysfunction. Despite billions of dollars in so-called “turnaround maintenance” over decades, the facilities have operated far below capacity, forcing Africa’s largest crude producer to import most of its petrol and diesel.

The Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) argues the problem is not a lack of expertise.

“Nigerians are not short of the skills to run refineries. What has crippled these assets is political interference, corruption and the denial of workers the tools and resources needed to deliver,” said Festus Osifo, the union’s president, at the PEALS 2025 Labour Summit in Abuja. 

Osifo pointed to the pandemic as proof of Nigeria’s capability, recalling how local staff kept offshore platforms running smoothly when expatriates left. “Our manpower is globally competitive. What we lack is policy stability and an enabling environment,” he added.

The union leader warned that frequent changes to petroleum laws and fiscal regimes have eroded investor confidence. In his words: “We must have an industry that investors can predict in five or ten years. Constantly changing policies will only chase away capital and delay growth.”

Policy instability and the investor question

From the long-delayed Petroleum Industry Act to shifting subsidy policies, Nigeria has struggled to offer a stable framework for investors. Meanwhile, analysts observe that rent-seeking and opaque contracting have scared off capital.

The contrast with the private sector-led Dangote project could not be starker. By leveraging long-term financing, strategic equity partnerships and a vertically integrated model, Aliko Dangote’s refinery avoided many of the pitfalls that sank state efforts. Its success underscores the potential of market-driven projects, but also highlights the risks of relying on political patronage.

Elsewhere on the continent, the calculus varies. Angola’s refinery push is driven by state oil company Sonangol, but backed by Chinese financing and engineering. Uganda’s Hoima project involves international consortiums, though financing has been repeatedly delayed. Modular refineries in Ghana and Congo offer a more flexible path, though they remain vulnerable to feedstock shortages and policy uncertainty.

North Africa presents a different story. Egypt and Algeria, with more mature downstream sectors, are seen investing in upgrades and expansions to capture higher margins and improve domestic supply security. Libya, recovering from years of conflict, sees refining as both an economic and political stabiliser.

Collectively, these projects amount to one of the most significant shifts in Africa’s energy industry in decades. Yet the risks of cost overruns, delays and political meddling remain high.

Underlying the continent’s refinery boom is a structural shift in Africa’s energy balance. With domestic oil consumption forecast to rise by 2.7 million bpd over the next quarter century, Africa’s crude export profile is projected to decline by more than one million bpd by 2050.

This trend strengthens the case for refining. By processing more crude at home, African countries can reduce import bills, improve energy security and capture more value domestically. But it also raises questions about stranded assets in a world moving toward decarbonisation.

Labour, ESG and the new energy politics

For unions like PENGASSAN, the debate is not just about infrastructure but about workers’ welfare and the future of organised labour. Osifo urged companies to prioritise capacity building to keep Nigerian workers globally competitive.

At the Abuja summit, Nuhu Toro, the Trade Union Congress’s secretary-general praised PENGASSAN’s foresight. “This platform reflects the kind of strategic dialogue required to navigate energy transitions. Labour must be part of the solution, not an afterthought,” he said.

The emphasis on ESG – environmental, social and governance – factors is becoming harder to ignore. International financiers increasingly require robust ESG frameworks, pushing African projects to adopt global standards in environmental compliance, worker safety and community engagement.

Betting on the downstream

OPEC estimates a $100bn investment window for Africa’s refining sector by 2050, positioning the continent as a frontier market for global capital. If harnessed effectively, this could transform Africa’s role in the global energy system  from marginal supplier of crude to integrated producer of high-value fuels.

Dangote’s achievement has shown what can be achieved with vision, capital and consistency. However, whether the same can be replicated at scale across state-owned assets remains doubtful.

As AEW in Cape Town convenes in September governments, it is expected that financiers and operators will address Africa’s refinery boom and how it can become a milestone of self-sufficiency rather than  another tale of squandered opportunity.

For now, the outlook is cautiously optimistic. This is even as the  demand is real, the projects are underway, and the investment appetite seems present. What remains uncertain is whether governance can rise to the occasion.