As shifting climate policies narrow the scope of fossil fuel investment from Western stakeholders, Africa’s energy landscape is undergoing a strategic realignment, with new players becoming more active.
In this context, the United Arab Emirates has emerged as a decisive actor, channeling capital and institutional capacity into key hydrocarbon assets across the continent.
From upstream gas ventures in Egypt and Mozambique to downstream acquisitions and refinery projects in South Africa and Uganda, Abu Dhabi is not merely increasing its presence, it is methodically consolidating it.
A rapid and coordinated entry into hydrocarbons
Between 2019 and 2023, the UAE became the leading foreign direct investor on the African continent, committing over USD 110 billion across sectors. Much of this capital has targeted the energy sector, particularly hydrocarbons, as Emirati entities seek to diversify their global portfolios and offset regional volatility. The Abu Dhabi National Oil Company (ADNOC) has taken a leading role in this effort through XRG, its newly formed international investment vehicle valued at USD 80 billion.
In December 2024, XRG partnered with BP to create Arcius Energy, a joint venture focused on natural gas operations in Egypt. XRG holds a 49 per cent stake in the platform, which includes interests in the Zohr and Atoll gas fields and several exploration blocks. Egypt has become a key destination for Emirati capital, culminating in a landmark USD 35 billion investment agreement signed in February 2024.
Elsewhere on the continent, ADNOC is pursuing further diversification. In March 2025, XRG completed the acquisition of a 10 per cent stake in Mozambique’s Area 4 natural gas concession, previously held by Galp, granting it access to the Coral South FLNG project and two additional developments, Coral North FLNG and Rovuma LNG. These projects had previously faced delays after the withdrawal of Western support over climate concerns, a void which Abu Dhabi has been quick to fill.
Strategic depth beyond upstream assets
The UAE’s engagement is not limited to exploration and production. It extends downstream and across the value chain. ADNOC has been shortlisted to acquire Shell’s downstream assets in South Africa, a deal estimated at USD 1 billion involving the purchase of over 600 fuel stations. If successful, it would grant ADNOC a 10 per cent share of South Africa’s retail fuel market, positioning the company as a long-term operator in Africa’s most industrialised economy.
The Emirati approach has also shown adaptability. In Uganda, where multiple efforts to develop a national oil refinery had stalled, Dubai-based Alpha MBM Investments signed a USD 4 billion agreement in March 2025 to build and operate the Kabaale refinery in partnership with the state-owned Uganda National Oil Corporation. The facility, expected to become operational by 2027, will refine 60,000 barrels per day. Alpha MBM holds a 60 per cent share, while the Ugandan state retains the remaining 40 per cent.
Such projects serve dual purposes: they address infrastructure deficits while building long-term commercial ties. Uganda’s government has openly welcomed the project as a means to unlock industrial potential and improve its trade balance.
A long-term strategic alignment
The UAE’s active role in African hydrocarbons contrasts with the growing reluctance of many Western investors to engage in fossil fuel development, especially amid ESG pressures and shifting regulatory environments. Several African governments see Abu Dhabi’s willingness to invest in both gas and oil as a sign of reliability and pragmatism.
This engagement also reflects the UAE’s broader strategy. As noted by analysts, the Gulf states are actively seeking to hedge against cyclical fluctuations by acquiring energy assets in diverse jurisdictions. Africa offers favourable demographics, rising demand, and underutilised potential, features that few other regions can match.
Moreover, Abu Dhabi’s approach appears to be guided by a long-term outlook. Through XRG and other vehicles, it invests in integrated platforms rather than isolated assets. Its interest in logistics, fuel distribution, and downstream processing complements upstream production, creating value chains that are both commercially viable and geopolitically stabilising.
For African states, this moment offers more than capital. It provides access to a new class of investment partners that combine liquidity, operational expertise, and strategic patience. The real test will lie in the quality of governance frameworks, the transparency of agreements, and the degree to which these partnerships translate into shared prosperity.
