The African Refiners and Distributors Association has announced that the continent’s crude oil consumption will surge from about 1.8 million barrels per day in 2024 to as much as 4.5 million barrels per day by 2050, positioning Africa’s downstream energy sector as one of the world’s most significant untapped investment frontiers.
Executive Secretary Anibor Kragha explained that by 2050, one in every four people on earth is expected to live in Africa, intensifying demand for transportation fuels as well as Liquefied Petroleum Gas and other refined petroleum products. However, despite rising consumption, Africa continues to rely heavily on imported refined products, exposing domestic markets to price volatility, foreign exchange pressures, and supply disruptions.
To close this gap and meet future demand, the association estimated that Africa will require more than $100 billion in refining investment between now and 2050. This includes refinery upgrades, capacity expansions, and new greenfield projects capable of supplying cleaner fuels at scale.
However, ARDA stressed that demand growth alone is not enough to attract investment, highlighting that downstream projects across the continent frequently fail to advance beyond the planning stage because they do not meet the basic bankability requirements of international investors.
One of the most critical barriers identified by Kragha was the lack of harmonized fuel specifications. Across Africa’s 54 countries, 46 maintain national fuel standards, resulting in 12 different petrol grades and 11 diesel grades. Sulphur levels range from as low as 10 parts per million to as high as 2,500 ppm for petrol and up to 10,000 ppm for diesel. This fragmentation restricts regional fuel trade, prevents economies of scale, and complicates refinery investment decisions.
ARDA estimated that upgrading existing African refineries to meet cleaner, harmonized fuel standards would require about $16 billion in investment. While significant, the association said this cost would unlock regional markets, reduce supply-chain inefficiencies, improve public health outcomes, and align Africa with global fuel norms.
Infrastructure constraints further compound the problem. A 2024 whitepaper by CITAC and Puma Energy cites widespread logistical weaknesses across the continent, including shallow ports unable to handle large vessels, congested berths, inadequate storage capacity, and over-utilized road and pipeline networks with multiple single points of failure. Collectively, these shortcomings add between $20 and $30 per tonne to the landing cost of fuel in African markets, eroding affordability and investor confidence.
While new refining capacity is coming onstream, including large-scale facilities such as the Dangote refinery, Kragha cautioned that refining expansion alone will not resolve Africa’s downstream challenges. The continent continues to struggle with moving fuel efficiently from coastal import and refining hubs to inland consumption centres.
Kragha emphasized that more than one billion Africans still rely on biomass for cooking, and the number has grown by 220 million since 2010. The health, environmental, and social consequences are enormous, positioning Africa as one of the most attractive markets for LPG investments globally.
Source: allafrica.com