Africa’s energy landscape is on the cusp of a transformative shift towards self-sufficiency, spearheaded by significant investments in refining capacity. A new report by the Africa Finance Corporation (AFC) projects a dramatic increase in the continent’s refining capacity, potentially reaching 90% by 2025, a substantial leap from the current 45%. Nigeria and Angola are positioned to lead this resurgence, driven by the commissioning of the massive Dangote Refinery in Nigeria and planned upgrades to existing state-owned facilities in both countries. This surge in refining capability signifies a bold move towards energy independence, promising to reduce Africa’s heavy reliance on imported petroleum products and bolster its energy security. The AFC report emphasizes the importance of complementary infrastructure development, particularly in transportation, storage, and distribution networks, to maximize the benefits of increased refining output.
This ambitious growth in refining capacity requires substantial investment, estimated at over $16 billion, primarily for upgrading existing refineries (brownfield projects) to meet modern clean fuel standards. While these brownfield projects are essential for enhancing efficiency and reducing reliance on imports in the short term, greenfield investments, focusing on the construction of entirely new refineries, are crucial for satisfying Africa’s future fuel demands. Nigeria and Angola, with their abundant oil reserves and strategic geographical locations, are emerging as the hubs of this refining renaissance. Their combined efforts will not only address the continent’s immediate fuel needs but also establish a foundation for sustainable energy independence in the long run.
Currently, Africa imports over half of its petroleum product requirements, a vulnerability the AFC report aims to address. By fully utilizing the projected increase in refining capacity, the continent could drastically reduce its import dependence to a mere 10%. The Dangote Refinery, along with the phased reopening of Nigeria’s Port Harcourt and Warri refineries, represents a crucial first step towards this goal, offering immediate relief to the continent’s fuel security concerns. However, the report cautions against relying solely on the Dangote Refinery. Given the scale of Africa’s growing demand, exacerbated by refinery shutdowns in other countries and frequent disruptions in supply, further capacity additions are urgently needed. Addressing challenges related to feedstock access, distribution infrastructure, and financing bottlenecks will be essential to unlock the full potential of the refining sector.
A key challenge for Africa’s refining sector is securing consistent access to crude oil feedstock. Currently, much of Africa’s oil production is locked into long-term export contracts, leaving little for domestic refineries. This is particularly evident in Nigeria, the continent’s largest oil producer, which often supplies crude oil to refineries in other African countries while struggling to meet the needs of its own facilities. Resolving this feedstock challenge requires a strategic shift in resource allocation, prioritizing domestic supply to fuel the burgeoning refining sector. Furthermore, overcoming financing hurdles and developing efficient distribution networks are crucial for realizing the full benefits of increased refining capacity.
Beyond the immediate concerns of refining and feedstock access, the report underscores the urgent need to modernize Africa’s fuel transportation infrastructure. The current overreliance on road transport, with 83% of petroleum products moved by trucks, creates logistical inefficiencies, congestion, and inflated costs. Transitioning to a more balanced transportation system that incorporates rail and pipeline networks is critical for optimizing fuel distribution. While some rail infrastructure already exists, it often requires significant rehabilitation and modernization. Similarly, new pipeline projects should be designed with future adaptability in mind, catering to the potential transport of alternative fuels like sustainable aviation fuel, liquefied petroleum gas (LPG), and hydrogen. This forward-thinking approach will enhance long-term infrastructure viability and attract investment, positioning Africa for a smoother transition to a more diversified energy future.
The AFC report paints a picture of a continent poised for a significant leap towards energy independence. The planned expansion in refining capacity, coupled with the necessary investments in supporting infrastructure, offers a pathway to greater fuel security and reduced import reliance. By prioritizing brownfield upgrades, strategically investing in new refining capacity, addressing feedstock access challenges, and modernizing transportation networks, Africa can unlock the full potential of its energy resources. However, the success of this transformation hinges on effective policy frameworks, innovative financing models, and a commitment to building resilient infrastructure capable of supporting both current petroleum needs and the continent’s eventual transition to cleaner energy sources. This holistic approach is crucial for ensuring long-term energy resilience and promoting sustainable economic development across Africa.
