Africa’s hydrocarbon endowment has re-emerged in policy debates as both a strategic asset and a test of governance. Senior Nigerian energy officials and regional leaders now frame a clear argument: hydrocarbons, if managed and monetised at scale and with domestic value addition, can finance industrialisation, expand electricity access and reduce the continent’s chronic bill for imported refined fuels. That argument formed the backdrop to recent public statements and industry forums in 2025, where speakers linked a frequently quoted US$120 billion figure to the scale of unexploited value and to the continent’s annual import bills for refined hydrocarbon products. The number is invoked in two related senses: as an index of missed economic opportunity and as a headline measure of the sums that could be retained on the continent by investing in local processing and integrated regional markets.
The central failure many leaders highlight is simple to state but hard to fix: Africa exports crude and often imports the finished fuels that power its economies. The result is persistent value leakage. Recent investments, especially in Nigeria, demonstrate the alternative. The Dangote Petroleum Refinery in Lagos, now the largest single refining complex in Africa, has a nameplate capacity of 650,000 barrels per day, and its owners are publicly pursuing staged expansions to as much as 1.4 million barrels per day. That project has already altered regional refining balances and changed the economics of local product supply, even as analysts caution that a single site will not close the continent’s refining gap on its own. At the same time, continent-wide refining capacity remains insufficient to meet rising demand for transport fuels, lubricants and petrochemical feedstocks. The result is a continued pattern in which value is created offshore while the domestic industry foregoes jobs, skills development and downstream tax revenues.
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Infrastructure is the enabling condition for any realistic value-addition strategy. The Ajaokuta–Kaduna–Kano (AKK) Gas Pipeline in Nigeria is repeatedly referenced by energy ministers as a demonstration of how pipeline connectivity can feed industrial clusters, fertiliser projects, power plants and manufacturing hubs. In 2025, NNPC Ltd and independent press reports recorded a major construction milestone when the AKK pipeline successfully crossed the River Niger, a step that ministers described as pivotal to bringing gas to domestic consumers and industry. The AKK is intended to reduce reliance on imported fuels, to fuel power generation and to supply feedstock for petrochemicals and fertiliser plants, thereby delivering the “industrial anchor” that leaders insist must accompany upstream extraction. For regional planners, projects of this kind also form the hardware of cross-border markets and intra-African trade in energy.
Reserves, Production and Investment Flows
To assess the opportunity, policymakers must square three numbers: proven resources, current production, and the capital flows required to convert reserves into domestic wealth. Nigeria’s proven gas reserves were reported by national regulators and industry commentators in 2025 at just over 210 trillion cubic feet (Tcf), a figure that underlines the raw scale of potential domestic gas supply for power, industry and export. Crude production has been recovering from the lows of recent years; official and industry trackers reported production rates around the 1.3–1.5 million barrels per day band through 2024–2025, while investment forecasts from sector analysts estimate African oil and gas capex in the low tens of billions of US dollars annually (with capex forecasts for 2025 in the region of US$40–45 billion, after a recovery earlier in the decade). Those numbers show that Africa already attracts major capital to hydrocarbon supply chains, but that the distribution of investment has been concentrated on upstream export projects rather than integrated domestic value chains.
Energy leaders in Nigeria and across Africa present a practical sequence rather than an ideological choice: secure affordable, reliable supplies now while designing an orderly path to lower-carbon systems later. International institutions remind them that the world is moving towards rapidly growing renewables and that investment decisions taken today will be judged by climate and market trajectories.
The International Energy Agency’s World Energy Outlook and the World Energy Investment series underline a dual reality: Africa needs hundreds of billions of dollars to achieve universal access and industrialisation, and meanwhile most recent energy investment in Africa has remained concentrated in oil and gas, creating both opportunity and risk. African policy choices therefore, need to combine pragmatic use of gas as a transition fuel with clear plans for emissions management, investment in low-carbon power (wind, solar, hydro), and measures to avoid locking economies into high-emissions pathways.
What Investors and Local Industry Require
Private capital follows clarity. Industry executives consistently identify four mutual necessities: stable and predictable fiscal regimes; enforceable and clear local content and procurement rules that are credible to investors; secure and timely dispute-resolution mechanisms; and bankable off-take and offtake-guarantee structures for gas and refined products. African leaders also point to the need for regional harmonisation of rules and standards under continental frameworks so that large assets and pipelines can serve multiple markets without becoming trapped behind tariff and regulatory walls. The African Continental Free Trade Area (AfCFTA) and Agenda 2063 are invoked as the policy architecture that can allow intra-African markets to absorb and process more of the continent’s hydrocarbons, but both instruments will require urgent, pragmatic implementation to deliver investor confidence and to scale industrial projects.
Energy ministers and company CEOs surveyed at recent forums highlight several technical and policy levers that together can convert resource wealth into industrial capacity. First, accelerating domestic refining and petrochemical projects, including staged expansions of existing hubs, reduces product import bills and creates high-value jobs. Second, prioritising gas-to-power and gas-to-industry projects near reserves minimises transmission losses and creates industrial clusters that can host petrochemical plants and fertiliser facilities. Third, expanding midstream infrastructure storage, pipelines, LNG trains, and condensate stabilisation facilities is essential to smooth seasonal and market variances. Finally, strong local content policy combined with skills development ensures that domestic workforces capture a rising share of the value chain. Each lever requires matched financing and governance frameworks to be effective. Evidence from recent projects shows the gains are tangible but that execution risk is high without predictable policies.
Hydrocarbons bring windfall rents and familiar political economy problems: volatility of export revenues, the risk of patronage and corruption, and the potential for social conflict when benefits are unevenly distributed. To avoid these outcomes leaders recommend robust fiscal institutions, transparent licensing and procurement, ring-fenced industrial funds, and pragmatic sovereign-private partnership models that link investor returns to domestic developmental outcomes. In practical terms, this means transparent publication of contracts, clear expectations for local employment and procurement, independent oversight of rents and royalties, and community-benefit mechanisms embedded in project design. International partners can help by conditioning finance on demonstrable governance reforms and by helping mobilise concessional capital to derisk early-stage infrastructure.
Leaders from Nigeria and elsewhere recommend a three-phase approach. The immediate phase emphasises unlocking gas for domestic power and industry and completing key pipeline projects and refineries to stop value leakage. The medium term focuses on scaling regional markets, closing the refining gap, and investing in downstream industries, petrochemicals, fertilisers, and logistics. The long term embeds climate compatibility through investments in renewables, electrification of industry, and carbon management strategies. The sequencing idea is pragmatic: use existing resource advantages to create economic capacity that can then underpin green investment and wider structural transformation. This approach accepts the political reality that energy security and industrial jobs are urgent priorities while also acknowledging global decarbonisation thresholds that will shape demand in the coming decades.
Policy choices must be deliberate and anchored in measurable outcomes. First, accelerate commissioning of domestic processing capacity where projects are bankable and commercially sensible, and link them to secure offtake arrangements. Second, harmonise regulatory and fiscal frameworks at regional and continental levels so that pipelines and refineries can serve multiple markets under predictable rules. Third, prioritise methane reduction, zero routine flaring, and transparent emissions reporting as part of any new project approval. Fourth, blend concessional finance with private capital for early-stage infrastructure to reduce the risk premium and crowd in international investment. Finally, embed social and environmental safeguards in project finance to sustain social licence and avoid costly interruptions. These steps align domestic ambitions with the multilateral frameworks that will continue to determine access to capital.
Navigating With Prudence and Purpose
Africa’s celebrated US$120 billion hydrocarbon headline is not a promise but a policy challenge: it is a reminder that latent resource value can either be skimmed abroad or be converted into jobs, factories and energy security at home. Nigerian energy leaders are clear in their preference for the latter path, but that requires more than rhetoric. It needs large and sustained investment in midstream and downstream infrastructure, credible governance reforms, and practical alignment with international climate and development frameworks so that hydrocarbon monetisation becomes a step towards industrial transformation rather than a last century’s inheritance. With disciplined sequencing, transparent institutions and regional market integration under AfCFTA and AU industrial strategies, hydrocarbons can be an instrument of development rather than an anchor on future prosperity.
