Africas downstream investments are failing to keep pace with one of the continent’s strongest upstream cycles in a decade. Africa’s oil and gas sector averaged 5.3 million barrels of oil equivalent per day in 2024 — a 5% increase on 2023 — yet the African Refiners and Distributors Association has warned that without comparable growth in refining, petrochemical, and storage capacity, rising output will continue to generate value outside the region.
Upstream Rebound Creates a Lopsided Picture
Nigeria expects to attract approximately $18.2 billion in upstream capital in 2025, and its crude output reached roughly 1.7 million barrels per day in August 2025 — up from a long-term average of 1.4 million bpd. Angola, Gabon, Equatorial Guinea, Congo, and Ghana are contributing steady production alongside Nigeria, with growth driven primarily by development drilling on existing fields rather than greenfield exploration.
Wood Mackenzie data shows international oil majors accounted for around 37% of upstream capital expenditure across the continent. National oil companies — both African and international — have become more active, acquiring stakes in strategic fields and broadening regional exposure. The Nigerian Upstream Petroleum Regulatory Commission approved 72 development wells for drilling and completion as of mid-2025.
Exploration results have strengthened the long-term resource base. An estimated 3 billion barrels of oil equivalent were discovered in 2024, with significant finds offshore Côte d’Ivoire and Namibia. Nearly 120,000 square kilometres of new acreage were awarded during the year, broadening the frontier for both local and international operators.
Africa Downstream Oil and Gas: The Persistent Gap
ARDA Executive Secretary Anibor Kragha has been direct about the structural imbalance: Africa exports crude and imports refined products, transferring value that could otherwise support domestic industrialisation. Many economies remain exposed to global supply disruptions and pricing volatility precisely because refining capacity has not kept pace with production growth.
The gap is not new, but it is widening as upstream output accelerates. Refinery utilisation across sub-Saharan Africa remains chronically low — a combination of ageing infrastructure, maintenance backlogs, and insufficient capital directed at processing capacity. The top downstream oil and gas companies operating globally have largely concentrated refining investment outside Africa, where margins and regulatory frameworks are more predictable.
Storage infrastructure faces similar constraints. Tank terminal capacity in most African markets is undersized relative to import and export volumes, creating bottlenecks in product distribution and limiting the ability of national oil companies to manage inventory strategically. The broader picture of global oil storage investment shows Africa accounting for a disproportionately small share of new terminal capacity.
Where Capital Needs to Flow
The case for downstream investment in Africa rests on straightforward economics. Refining crude domestically captures more value per barrel, generates industrial employment, and reduces foreign exchange exposure on fuel imports. Petrochemical capacity adds a further layer — converting hydrocarbons into feedstocks for plastics, fertilisers, and industrial chemicals that currently arrive as finished imports.
Several projects are attempting to shift this balance. The Dangote Refinery in Lagos — designed for 650,000 bpd of throughput — represents the largest single downstream investment on the continent in decades. Progress has been slow and heavily scrutinised, but it illustrates both the scale of ambition and the complexity of execution in African downstream development.
Saudi Arabia’s downstream expansion offers a reference point for what coordinated policy and capital deployment can achieve. Saudi Arabia’s downstream petrochemical growth has been built on decades of deliberate investment in refining and chemicals alongside crude production — a model African producers have struggled to replicate at scale.
Africa Downstream Oil and Gas: Outlook for 2026
ARDA’s position going into 2026 is that upstream momentum will not automatically translate into downstream development without deliberate policy intervention and improved investment conditions. Fiscal terms, feedstock access, infrastructure reliability, and regulatory certainty all factor into final investment decisions on refining and petrochemical projects.
The continent’s strongest opportunity may lie in regional integration — shared refining hubs serving multiple markets, with pooled demand justifying the capital cost of modern, large-scale facilities. Without that shift, the Africa downstream oil and gas gap will persist alongside what is otherwise one of the most active upstream cycles the continent has seen in a decade.
Why does Africa export crude oil but import refined fuel products?
Most African countries lack sufficient domestic refining capacity to process their crude output into usable fuels. This structural gap means crude is exported for processing abroad, with refined products then reimported at higher cost — exposing economies to global supply and price volatility.
What did ARDA say about Africa’s downstream investment gap in 2025?
ARDA Executive Secretary Anibor Kragha warned that downstream investments are not keeping pace with Africa’s upstream rebound. He cautioned that the imbalance limits local industrialisation and leaves African economies dependent on imported refined fuels despite rising crude production.
How much did Africa’s upstream oil and gas production grow in 2024?
According to Wood Mackenzie, Africa’s upstream production averaged 5.3 million barrels of oil equivalent per day in 2024 — approximately 5% higher than 2023. Nigeria, Angola, Gabon, Equatorial Guinea, Congo, and Ghana were the primary contributors.
What is the Dangote Refinery and why does it matter for Africa downstream oil and gas?
The Dangote Refinery in Lagos, Nigeria is designed for 650,000 barrels per day of throughput, making it the largest downstream project on the continent in decades. It represents a direct attempt to close Africa’s refining gap, though progress has been slower than originally projected.
What new oil and gas discoveries were made in Africa in 2024?
An estimated 3 billion barrels of oil equivalent were discovered across Africa in 2024, with significant finds offshore Côte d’Ivoire and Namibia. Around 120,000 square kilometres of new exploration acreage was also awarded during the year.