Business
African Nations Turn to Dangote Refinery as Middle East Fuel Supplies Dry Up
African Nations Turn to Dangote Refinery as Middle East Fuel Supplies Dry Up
By Okeoghene Onoriobe, Waterways News Correspondent, Lagos
Several African countries, including South Africa, Ghana and Kenya, are pivoting to Nigeria’s Dangote Refinery for refined petroleum products as fuel supplies from the Middle East tighten amid the ongoing Israel-US-Iran conflict and escalating threats to the Strait of Hormuz.
The supply crunch, reported by Bloomberg, has left many African nations urgently seeking alternatives after years of heavy dependence on large Persian Gulf refineries for their fuel needs.
At the centre of the continental shift is the 650,000-barrel-per-day Dangote Refinery, situated on the outskirts of Lagos. The $20 billion facility — Africa’s largest single-train refinery — began operations in 2024 after years of delays and cost overruns, and is now emerging as a critical energy lifeline for the continent.
Surge in African Demand
Industry sources say the refinery is fielding strong interest from multiple countries, with some governments already initiating talks to secure dedicated supply agreements as they race to avert looming energy shortages.
The refinery’s founder, Africa’s richest man Aliko Dangote, told The Economist that the current scramble is being driven less by price and more by availability.
“Right now it is not about pricing, it’s about availability. I think the situation will continue for a while,” Dangote said, warning that the supply squeeze could persist as geopolitical tensions continue to disrupt global energy flows.
Africa’s Structural Vulnerability Exposed
The crisis has laid bare Africa’s long-standing and structural dependence on imported refined products — a vulnerability that extends even to oil-producing nations. Nigeria itself, until recently, exported crude oil abroad for refining before re-importing finished products at significantly higher costs, a costly cycle the Dangote Refinery has begun to reverse.
Analysts, however, caution that the plant alone cannot fully bridge the continent’s fuel deficit. Domestic demand in Nigeria still accounts for roughly three-quarters of the refinery’s output, leaving only limited volumes available for export to other African markets. Additionally, many countries lack sufficient strategic reserves to cushion prolonged supply disruptions.
The continent’s exposure is underscored by the fact that no African country is a member of the International Energy Agency (IEA), which requires member states to hold at least 90 days of net oil import reserves — a benchmark that highlights how thinly buffered African economies remain against supply shocks.
Contingency Measures as Competition Intensifies
Governments across the continent are already rolling out emergency measures. Ethiopia has urged citizens to conserve fuel and prioritise public transport, while major corporations in South Africa are moving to secure supplies for critical operations.
Analysts expect competition among African buyers for available refined product volumes to intensify in the weeks ahead — a development that, while placing pressure on end consumers, is likely to boost revenues for Dangote’s refinery and strengthen Nigeria’s emerging role as a regional fuel supplier.
Nigeria Watch
The growing African demand for Dangote Refinery output carries both opportunity and risk for Nigeria’s maritime and downstream energy sectors. On the upside, increased export demand could drive up vessel traffic through Lagos ports, particularly at the Lekki Deep Sea Port and Apapa, boosting freight revenues and supporting ancillary maritime services. However, should export volumes rise significantly, Nigerian consumers and energy-intensive industries may face increased competition for domestic supply — potentially exerting upward pressure on pump prices. For NIMASA, the NPA and operators in Nigeria’s coastal shipping sector, the evolving dynamics present a compelling case for accelerating investment in product tanker capacity and coastal distribution infrastructure, to ensure that Nigeria can service both its domestic market and its emerging role as Africa’s refining hub.