LPG Investment: The Key Opportunity for Africa’s Future
Investing in Liquefied Petroleum Gas (LPG) represents a critical opportunity for Africa’s downstream sector over the next two decades, with immediate action needed.
Health Risks Associated with Traditional Cooking Methods
During the International Energy Agency’s inaugural Summit on Clean Cooking in Africa, held in Paris in May 2024, Akinwumi Adesina, former President of the African Development Bank, shared personal experiences of studying by smoky lamps and cooking fires, which he linked to vision impairment. Today, nearly one billion people in Africa rely on firewood and charcoal for cooking, contributing to around 815,000 fatalities annually due to household air pollution. Despite a population growth of 30 million in sub-Saharan Africa from 2022 to 2023, only 11 million gained access to clean cooking alternatives.
The Ascendancy of LPG
For the past decade, refining has been the predominant narrative in Africa’s downstream market. However, the spotlight is shifting to LPG, currently the continent’s fastest-growing petroleum product. It serves as a vital component for clean cooking but is hindered by an inadequately developed supply chain. To leverage this growth, significant investment is required in areas such as gas processing, import terminals, bottling facilities, inland logistics, and household cylinder distribution.
A Proactive Approach is Essential
Africa’s growth trajectory will depend on who invests in establishing infrastructure that effectively connects supply to demand rather than merely possessing resources.
The Path to Clean Cooking Access
LPG is responsible for 76% of individuals gaining access to clean cooking in sub-Saharan Africa. However, the region’s consumption was only 6.4 million tonnes in 2025, translating to a meager 4.8 kg per capita, in stark contrast to over 50 kg in North Africa. Demand surged by 12% in the previous year, and CITAC Africa anticipates a near tripling of consumption to 17 million tonnes by 2045, amidst projections that one in four people globally will be in Africa by 2050.
The Supply Chain Challenge
Currently, the supply chain is ill-prepared to meet this demand. Although the United States is the largest supplier of LPG to Africa, sub-Saharan terminals cannot accommodate full Very Large Gas Carrier (VLGC) cargoes, typically around 45,000 tonnes. Moreover, only approximately 20 storage facilities across the continent can handle 10,000 tonnes or more, with stockpiles often sufficient for as little as ten days of demand. The market relies heavily on spot purchases of small, costly shipments, lacking long-term contracts and price stability. The constraints are not on demand but on infrastructure, such as terminals, cylinders, and transportation.
The Potential for Value Chain Investment
Investment is crucial across the supply chain, encompassing gas processing and refining to retain more African LPG domestically, establishing VLGC-capable import hubs, and creating strategic storage for long-term contracts. Additionally, developing bottling plants and cylinder production will facilitate cost reductions for households, along with improving logistics for landlocked nations and last-mile distribution using smaller cylinders and pay-as-you-go models. The IEA estimates the annual cost for universal clean cooking in Africa will be about $2 billion by 2040, a figure that represents less than 0.1% of global energy investments. The challenge lies not in the availability of capital but in crafting bankable structures; programs often fund only stoves instead of the entire supply chain.
Urgency in Investment
The window for investment is closing quickly, and early movers are in a position to influence Africa’s LPG landscape. Key considerations should focus on who invests, where, and how to align developers with financiers.
Who Should Invest?
No singular entity can achieve this goal alone; each player has a role to play and motivation to act.
U.S. producers currently supply the majority of LPG shipments, and establishing long-term contracts with formula pricing for 12 to 24 months could render import hubs more appealing for investment, ideally supported by minority equity participation. This approach can solidify a foothold in a region where LPG demand is expected to grow consistently over the coming decades. Additionally, the U.S. Department of Energy supports the Fueling Lives initiative to advocate for LPG access internationally.
International trading companies like Petredec, Vitol, and Trafigura have the resources and expertise for operating multi-country hubs. They can facilitate cargo aggregation and redistribution, securing advantageous positions at critical ports for first movers.
Gulf region partners, including national oil firms and sovereign wealth funds, are also poised to contribute. They can provide necessary capital and cargo financing while positioning themselves for downstream growth. Saudi Arabia’s Oil Sustainability Program, through Forward7 and the IGNITE challenge, supports LPG clean cooking initiatives, while trade financiers can assist with cargo funding.
Chinese investments are already making their presence felt, with agreements such as the memorandum of understanding between NNPC and Sanjiang Chemical for the potential revival and expansion of key refineries in Port Harcourt and Warri. These partnerships could pave the way for advancements in gas processing, petrochemical facilities, and cylinder manufacturing, provided that cooking-grade butane remains available for local households.
African national oil companies can offer ports, land concessions, domestic gas, and partnerships to enhance energy security derived from gas currently flared or exported. Local marketers like Oryx Energies and Sahara have the market knowledge and connections essential for last-mile delivery, with Oryx recently establishing Zanzibar’s first LPG import terminal in 2024. These last-mile investments have proven profitable.
A successful model may involve a regional hub consortium, where a trader serves as the operator, supported by U.S. supply contracts and an African national oil company as the host, while Gulf or development financing provides capital. African marketers can then focus on inland and last-mile distribution.
Strategic Regions for Investment
Anchor Markets: Current Scale
Countries like Nigeria, Côte d’Ivoire, South Africa, and Angola account for more than half of sub-Saharan Africa’s LPG demand. Nigeria, for instance, aims to escalate annual consumption from 1.4 million tonnes to 5 million tonnes by 2030. As the Dangote refinery begins to reduce imports, the focus will shift toward gas processing, storage, bottling, and distribution. Côte d’Ivoire and South Africa have exhibited substantial growth, and infrastructural developments are underway in Durban and other coastal areas, while Angola’s new terminal at Barra do Dande positions it as a prospective regional supplier.
Corridor Hubs: Serving Multiple Markets
Coastal hubs can effectively supply neighboring landlocked nations. For example, Kenya’s Mombasa can meet the LPG requirements of Uganda, Rwanda, South Sudan, and parts of eastern DRC, backed by the completion of a VLGC-capable terminal. Similarly, Tanzania can service Zambia, Malawi, and Burundi through its developments. Côte d’Ivoire and Ghana are also essential gateways for the Sahel region.
Frontier Markets: Major Potential
The Democratic Republic of Congo (DRC) and Ethiopia possess vast populations yet consumed only 25,000 and 28,000 tonnes of LPG, respectively, in 2025. Developing supply networks in these regions can fundamentally transform their energy status and consumption patterns for generations.
Facilitating Collaborative Opportunities
For multi-country investments to flourish, a neutral platform involving governments, regulators, corporations, and financiers is imperative. The African Refiners and Distributors Association (ARDA) plays a vital role in this respect, uniting regional consortium partners through its established network.
The ARDA Investment Forum evaluates projects based on sustainability, regulatory frameworks, economic and technical viability, and execution capability, ensuring that bankable projects connect seamlessly with potential financiers, including notable institutions like Afreximbank and the Africa Finance Corporation.
Collaborating with the Global LPG Partnership (GLPGP), ARDA is working toward a $1 billion fund dedicated to clean cooking, engaging African development finance institutions to develop a pipeline primarily focused on VLGC-capable terminals.
By holding its annual LPG Forum, in collaboration with the World Liquid Gas Association and other stakeholders, ARDA promotes a harmonized regulatory environment, advocating for safety standards, pricing strategies, and access to shared infrastructure.
Seizing the Opportunity
First movers are already establishing their footholds in the market, with significant interest from Chinese investments in Nigerian infrastructure. While major LPG exporting nations like the U.S. and Saudi Arabia promote clean cooking initiatives in Africa, the absence of large-scale terminal investments represents a significant opportunity for prospective stakeholders. Strategic port locations, concessions, and long-term customer relationships are limited resources. Early investment in these areas could yield substantial rewards as African LPG demand is set to triple.
With available fuel sources and undeniable demand, the question remains: who will ensure that future generations can study under clean light and enjoy smoke-free meals?
Industry leaders are invited to participate in ARDA’s third LPG Forum in Dar es Salaam on November 24-25, 2026, themed “Unlocking Africa’s LPG Potential: A Catalyst for Industrialisation, Energy Security, and an Inclusive Energy Transition,” marking an opportunity to turn Africa’s LPG potential into impactful investments for a healthier future.
Anibor O. Kragha, Executive Secretary, African Refiners and Distributors Association (ARDA)
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