According to the African Refineries and Distributors Association (ARDA), the continent's crude oil consumption is set to experience spectacular growth, rising from around 1.8 million barrels per day in 2024 to 4.5 million barrels per day by 2050. This projection, unveiled by Anibor Kragha, Executive Secretary of ARDA, places Africa's downstream energy sector among the world's last high-growth investment frontiers. This trajectory is directly linked to demographics, as one in four people in the world is expected to live in Africa by 2050, which will massively increase demand for transport fuels, liquefied petroleum gas (LPG) and other refined petroleum products.
A costly paradox: exporting crude oil, importing finished products
Behind this promising demand curve lies a costly structural paradox. While crude oil production (upstream) is growing on the continent, investment in refining (downstream) is stagnating. As a result, Africa remains heavily dependent on imports of refined products, exposing its domestic markets to price volatility, foreign exchange pressures and supply disruptions. This dependence generates a high energy bill and hampers economic development.
To bridge this gap and meet future demand, ARDA estimates that Africa will need more than $100 billion in refining investments by 2050. These funds must support modernisation projects, capacity expansion and new greenfield units capable of producing cleaner fuels on a large scale. However, the association stresses that demand growth alone is not enough to attract international capital. Downstream projects often fail to progress beyond the planning stage because they do not meet investors' fundamental bankability requirements.
Major obstacles: fragmented fuel standards and inadequate infrastructure
One of the main obstacles identified by Mr Kragha is the glaring lack of harmonisation in fuel specifications. Of the 54 countries on the continent, 46 maintain national standards, resulting in 12 different grades of petrol and 11 different grades of diesel. Sulphur levels, for example, range from 10 to 2,500 parts per million (ppm) for petrol and can reach up to 10,000 ppm for diesel. This fragmentation blocks regional fuel trade, prevents economies of scale and complicates investment decisions in refineries.
Infrastructure constraints exacerbate the problem. A 2024 white paper by CITAC and Puma Energy cites widespread logistical weaknesses: shallow ports, congested berths, inadequate storage capacity, and overused road and pipeline networks with multiple single points of failure. These shortcomings add between $20 and $30 per tonne to the cost of fuel landing in African markets, undermining both affordability for consumers and investor confidence.
Modernising existing refineries to comply with clean, harmonised fuel standards would require approximately £16 billion in investment. "This investment would unlock regional markets, reduce supply chain inefficiencies, improve public health and bring Africa into line with global fuel standards," said Mr Kragha. ARDA is currently working to build a portfolio of bankable downstream projects with clearly defined supply and marketing structures.
Beyond refining: the urgency of supply chains and clean cooking
The ARDA Executive Secretary also cautioned against an overly narrow focus on new refining capacity, such as the Dangote mega-refinery. Even with these new plants, the continent still struggles to efficiently transport fuel from coastal hubs to inland consumption centres. Inefficient supply chains, particularly to mining and industrial areas, continue to constrain economic growth.
At the same time, the association highlights a huge investment opportunity in LPG for clean cooking. More than a billion Africans still rely on biomass (wood, charcoal) for cooking, a number that has increased by 220 million since 2010. "The health, environmental and social consequences are enormous – and so is the opportunity. The scale of unmet demand positions Africa as one of the most attractive markets for LPG investment in the world," said Mr Kragha.
In conclusion, the ARDA presents a contrasting picture: a future of guaranteed demand driven by demographics, but a present hampered by structural imbalances. The roadmap to remedy this is clear: harmonise specifications, rebuild end-to-end infrastructure, establish regulatory and investor discipline, and massively develop clean cooking. "Africa's downstream sector is one of the last great frontiers for high-growth energy investment in the world. The capital requirement exceeds $100 billion. And the potential economic return is transformative," concluded Anibor Kragha. The ball is now in the court of policymakers and investors to take up this historic challenge.