Africa's expansion of oil refineries opens the door to Gulf investors
Africa’s oil refining industry is entering a new phase of expansion, driven by the growing convergence between the continent’s need to bolster energy security and reduce its reliance on fuel imports, and the long-term investment ambitions of Gulf states. This alignment is opening up significant opportunities in refining, petrochemicals, storage, and energy-related infrastructure.
According to Oil & Gas, lawyers specializing in the energy sector at Clyde & Co note that this convergence reflects a growing alignment between Africa’s food and energy security priorities and Gulf investment trends.
Despite possessing some of the world’s largest crude oil reserves and exporting large volumes of high-quality crude, many African countries remain heavily dependent on importing gasoline, diesel, and aviation fuel due to limited local refining capacity.
As the intersection between Africa’s energy security needs and Gulf investors’ priorities continues, the refining sector is poised to become a key pillar in reshaping fuel trade between the two continents. The impact of these investments could extend to deepening economic ties, developing infrastructure, and creating new energy and industrial corridors linking Africa with the Middle East, thereby strengthening the Gulf’s position as a primary investment partner in Africa’s energy sector transformation.
Africa spends up to $90 billion annually on refined fuel imports, according to Clyde & Co data. Recent disruptions in global fuel markets, including supply shortages caused by the shutdown of some Russian refineries, alongside volatility in shipping and trade through the Strait of Hormuz, have highlighted the fragility of reliance on external supply sources and the magnitude of associated risks.
In response to these challenges, governments and energy companies across various parts of Africa have intensified their investments in refining, petrochemicals, storage, and related infrastructure, aiming to reduce dependence on imported fuels, support industrial development, and maximize the added value of local natural resources.
Major projects, led by Dangote Refinery in Nigeria, alongside investment initiatives in Angola and East Africa, underscore the sector’s potential and the growing trend toward establishing regional refining hubs to meet local and regional demand for petroleum products.
Conversely, Gulf investors are increasing their presence in this transformation. Africa remains one of the regions where population growth, urban expansion, and industrial activity continue to drive long-term demand for transport fuels, petrochemical products, and energy infrastructure.
This further enhances the continent’s appeal to Gulf sovereign wealth funds, national oil companies, traders, and infrastructure developers seeking expansion opportunities in industrial and energy sectors with long-term growth potential.
In this context, Brian Wilson, Partner at Clyde & Co in Abu Dhabi, stated that these opportunities reflect the growing convergence between African and Gulf priorities. He explained that African countries are seeking to enhance energy security, reduce reliance on imported fuels, and develop local industrial capacities, while Gulf investors are looking for long-term investment presence in markets with rising demand for energy and infrastructure. He emphasized that the refining sector serves as a crucial link between these priorities.
Wilson noted that investment opportunities extend beyond the establishment of refineries to encompass the development of integrated systems around refining projects, including ports, storage facilities, logistics networks, and industrial zones. These comprehensive infrastructure requirements offer a broader scope for Gulf investors, who increasingly view Africa as a long-term growth market rather than merely a source of raw materials.
For his part, Josh McFadden, a partner at Clyde & Co in Abu Dhabi, stated that many of these projects require more complex investment and financing structures involving governments, national oil companies, private-sector investors, lenders, traders, and contractors across multiple countries and legal systems.
He added that the expansion of refining capacity would lead to a greater focus on project finance, joint venture arrangements, supply agreements, purchase structures, and advanced contractual frameworks suited to the nature of long-term infrastructure investments.
McFadden emphasized that the success of Africa’s expansion in refining and processing industries would not depend solely on the availability of capital, but would also require greater political stability, alongside legal and commercial frameworks capable of distributing risk, enhancing confidence, and providing sufficient investment security throughout the asset lifecycle.
