By Daniil Moskalev*
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.
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.
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.
*Source African Energy Chamber
