Africa's Ambitious Refinery Projects: Will They Be Enough?

Great strides have been made in refinery projects across Africa. We at the African Energy Chamber (AEC) believe that these projects are a step in the right direction, but we caution that these strides alone will not be enough to close the gap in refining capacity for most African crude oil producing nations. As our recently released “State of African Energy: 2026 Outlook Report” shows, further refinery projects have been announced but seem unlikely to materialize due to a fundamental hurdle: weak economics, which discourages both state backing and private-sector investment. To remedy this hurdle, we must first lay out the current state of Africa’s refinery infrastructure and the trade imbalances that exist around it. A Look at Africa’s Leading Refinery Projects The most significant development so far has been Nigeria’s Dangote refinery, which is now Africa’s largest refinery — and is larger than any refinery in Europe. Its commissioning ceremony was in May 2023 with test runs beginning in January 2024. Middle distillate sales followed just a few months later in April 2024, and by September, it began production of initial gasoline quantities. By the end of 2024, the refinery achieved approximately half of its operational capacity. Its impact is already evident: Nigeria has begun exporting gasoline and diesel to neighboring West African countries, as well as jet fuel to Europe and the Americas. Not only this, but Nigeria’s gasoline imports from Europe have also dropped. Despite these early successes, unexpected struggles in commissioning the residue fluid catalytic cracking (RFCC) unit (which converts heavy, high-boiling, and complex hydrocarbon fractions into lighter and more valuable products) and the unplanned maintenance that came with it have jeopardized the refinery’s original goal of reaching full operational capacity by the end of 2025. Still meeting that goal will depend heavily on whether it can thread the needle through the remainder of the startup process. Further complicating this process is the question of whether there will be enough crude oil feedstock available. In 2024, the refinery imported nearly 20% of its total crude oil intake from the US, having struggled to obtain sufficient volume from domestic sources. As the refinery’s production ramps up in 2025 and beyond, it will require even greater volumes of crude oil feedstock. These challenges aside, gasoline production at the refinery is expected to hit full gear by early 2026, in line with the AEC’s anticipated time for the RFCC unit to reach full capacity. Of smaller but still significant note are Angola’s Cabinda refinery and Uganda’s Hoima refinery. The Cabinda refinery is the only greenfield refinery project expected to come onstream in Africa in 2025. Phase 1 of the project, which involves a refining capacity of 30,000 bbl/d, is nearing completion, with operations expected to commence in the second half of 2025. Phases 2 and 3 are expected to complete approximately 18 months after Phase 1 and will add an additional 30,000 bbl/d of capacity. Meanwhile, despite some initial setbacks, the Hoima refinery project looks to be back on track. An implementation agreement for its development was signed in March 2025, moving it closer to construction. That said, the completion of the first phase, which is expected to have a capacity of 30,000 bbl/d out of the planned total of 60,000 bbl/d, is still several years off — 2028 being the earliest estimate. There are also several government-led refinery upgrades occurring in Angola, Egypt, and South Africa. The Economic and Financing Challenges of Refinery Projects In order for a refinery project to be viable, it needs to be economically attractive — and/or receive significant state support. That’s just a practical reality. Such an economically attractive refinery will almost certainly be located in proximity to a crude oil production concession and refined product demand centers, in large part due to the savings from not needing to transport locally produced crude oil to distant markets or import refined products from distant markets to meet domestic demand. While numerous projects (aside from those mentioned above) have also been announced in various African countries, many of them seem unlikely to materialize because of weak economic attractiveness. Which of course means a lack of concrete financing solutions. This all comes at a time of growing reluctance from Western financiers to back fossil fuel projects. The AEC fears that even, when is the economics are strong enough to entice financing, future funding will likely need to be sourced domestically or from partners in the Middle East and Asia. It is against this backdrop that the soon-to-be-launched African Energy Bank is stepping in. As a partnership between Afreximbank and African Petroleum Producers Organization, the bank’s mission is to fund oil and gas projects on the continent. It aims to start operations in the second half of 2025. But even this measure, while a significant step in the correct direction, is not enough. How then, you might ask, can African countries remedy these challenges ahead of their refinery efforts? I see two methods, both of which must occur together to have the greatest effect: Recognize that trading inefficiencies could actually offer growth opportunities; and Increase collaboration on regional infrastructure initiatives to further unlock transformative growth opportunities that individual countries cannot achieve alone. The Current Trade Inefficiencies in Africa’s Refinery Sector Despite the size of the Dangote refinery, the AEC report expects that its commission will barely impact Africa’s rapidly growing imports of refined products. The continent will unfortunately remain short on refined products such as gasoline, gasoil, and jet fuel through our forecasted period out to 2050, with domestic residual fuel oil production staying roughly equal to consumption. This will in turn limit net exports, while the continent will maintain a positive, albeit slightly diminishing, net balance for naphtha. While we do expect net imports for gasoline and gasoil to reduce considerably in 2027, thanks to the support from the Dangote refinery and other greenfield projects, net imports for both products will ultimately widen in the long term, given the strong growth in demand and limited additions to refining capacity. We project gasoil net imports to reach just under 1.8 million bbl/d by 2050, whereas gasoline net imports are forecast to exceed 1.5 million bbl/d. But the long-term import outlook is only a symptom of broader challenges in Africa’s refining ecosystem — challenges that continue to prevent the continent from capturing greater value from its own resources. Many African countries, especially in West and North Africa, are rich in crude oil reserves and continue to export substantial volumes to international markets — mainly Europe, Asia and the Americas. However, despite being crude oil producers, most African countries lack adequate refining capacity, which forces them to import refined products. Instead of capturing value through refining, storage, and downstream infrastructure, African nations often export low-value crude oil and import high-value refined products. This puts African economies at a huge disadvantage, losing out on job creation, skills development, and industrial growth in the process. There is also little regional integration in oil trades; most countries trade with Europe or Asia instead of their own neighbors, missing out on building a more resilient intra-African energy market. Despite this, importing refined products remains more expensive than refining domestically, with African countries paying a premium for transport, insurance, and other fees and markups. Unfortunately, this potential opportunity is foiled by the fact that many African refineries are outdated or non-operational due to poor maintenance, corruption, or policy failures. It’s a paradox we can no longer afford: exporting crude for processing overseas while importing the refined products our economies depend on. We at the AEC strive to move beyond this current scenario. Opportunities for Growth and Collaboration Africa’s crude-rich, refining-poor imbalance has led to a busy trading flow and turned the continent into a hub in global oil shipping routes. As we note in our 2026 Outlook, if existing trade inefficiencies are addressed through policy reforms, better regulations, and regional cooperation, this fact could be capitalized on to unlock significant economic benefits and much-needed infrastructure development for the continent. Investment in refining capacities can gradually reverse the trade imbalance. Above all, however, I feel that regional infrastructure investment will be key for a more permanent solution: Infrastructure development serves as the backbone of economic development. Africa’s regional infrastructure has struggled to handle existing product flows, with East African entry ports for refined products experiencing significant demurrage. Onshore pipeline systems, such as those linking Beira in Mozambique to Indeni in Zambia, are currently constrained in their capacity, forcing significant product volumes to be moved inland by road. The continent’s growth potential remains constrained by gaps in cross-border connectivity, especially when it comes to energy, transportation, and storage systems. This is the unfortunate result of the fragmented approach to infrastructure investment we’ve seen up to this point. It is disappointing, to say the least, that these impressive national projects remain isolated, simply unable to capture the economies of scale and network effects needed to sustain growth. Only by collaborating on regional infrastructure initiatives to remedy this shortcoming can we unlock the truly transformative growth opportunities in front of us. We have the chance to manifest opportunities greater than any individual country can (as history has demonstrated) achieve alone. The African Continental Free Trade Area (AfCFTA) has already demonstrated the economic potential of regional integration, and extending this collaborative spirit to infrastructure development could catalyze industrial growth, reduce operational costs, and attract foreign investment. By harmonizing regulatory frameworks, pooling financial resources, and prioritizing projects with regional impact, I am confident that African governments can transform infrastructure from a barrier into a catalyst for continental prosperity.