Africa has been a perennial laggard, when it comes to refining capacity and hence a viable market for oil products. In its latest weekly report, shipbroker Gibson said that “the history of African refining is chequered, to say the least. Of the many refinery developments that have been announced over the past decade, most stalled in their initial stages and few have made it to completion. Once built, problems have not let up, and refineries often struggle with consistently low utilisation as well as frequent outages. Further, the complexity of refineries has generally been low, limiting crude slate intake diversity as well as product output, leading to lower margins and lower product quality. Another element has been the difficulty in sourcing and guaranteeing a steady flow of local or regional crude, in part due to political and infrastructural obstacles. The Dangote refinery in Nigeria, despite facing many of the above issues, has turned into a relative success. Utilisation stood at an average rate of 83.6% in H1 2026, which is expected to increase further in the second half of the year after reaching full crude distillation capacity. Conversely, the Nigerian National Petroleum Company attempted restarts at the mothballed refineries Port Harcourt and Warri in late 2024, but after around 6 months the refineries shut down again”.
According to Gibson, “current sky-high refining margins have given some impetus to the numerous ongoing refining projects across the continent, with national security interests a potentially equally strong driver. The Dangote refinery is already the largest refinery on the continent and looking to double refining capacity to 1.4mbd by 2029 bringing it in line with the world’s largest. Significant progress has been made towards financing, with a partial IPO imminent. However, given meaningful delays to the original build timeline, some doubts remain whether a 2029 completion date is possible to achieve. Dangote is also looking to build a copy of its Nigerian design in Kenya, the Dangote Lamu refinery, also with 700kbd of capacity, on an island off the east African coast. Groundbreaking is taking place at the end of September, but with no final investment decision (FID) taken and financing uncertain, this project could take many years to complete, if it does so at all”.
Source: Gibson Shipbrokers Ltd
“Several other large projects are in their infancy, and most have had no FID taken, indicating uncertain prospects. An MOU was signed last month for the Tanga energy hub in Tanzania with a proposed refinery. No details have been released as to the projected capacity, or any kind of timeline. Similarly, in Côte d’Ivoire, Yaatra Ventures and SIR (the latter runs the country’s only refinery Abidjan), signed an MOU to build a 170kbd refinery in 2025, with little news since. The Lobito refinery, a 200kbd joint project between Sonangol and Sonaref, is under construction in Angola, initially guided for completing in H1 2027 this project looks likely to be delayed significantly, especially with further financing uncertain. Also in Angola, an expansion of Sonangol’s Luanda refinery was agreed between Sonangol and ENI in April 2025, from now 65 to 120kbd by 2028. Little news has reached the market since. In South Africa, a total of around 700kbd of new refining capacity is being discussed, including a 400kbd Sapref rebuild outlined this week. However, none of these discussions are post-FID. Further projects are in various stages of infancy”, Gibson said.
“Thus, the additional capacity expected to reach the market in the next couple of years is limited and is likely to come from expansions to already existing refineries. Any increases in East Africa especially are not expected for some years yet, maintaining reliance on imports from India and the Middle East and keeping the MR and LR2 markets here supported. In West Africa, the market is digesting high utilisation at Dangote, as product exports run at record highs, whilst imports are declining. Capacity here could start to expand from 2028 onwards, as expansions at Cabinda, Luanda, Dangote, and construction at Lobito near targeted start-up dates. If history is any indication, slippage is all but guaranteed. Nonetheless, the structural decline in product imports into especially West Africa looks set to continue, with projected demand growth covered by planned increases in refining capacity. Conversely, cross West African trade has flourished, but despite greater volumes the limited distances involved are likely to make this a net negative for clean tonne mile demand overall. If the Dangote refinery’s eventual success in procuring local crudes for the refinery lasts and can be replicated, the outlook for overall crude exports is also negative, though the impact could be mitigated by any increases in crude production”, the shipbroker concluded.
