Kenya, Tanzania and Uganda are racing to build competing multi-billion-dollar oil infrastructure. Nigerian billionaire Aliko Dangote's $17 billion refinery in Kenya's Lamu has pushed Tanzania and Uganda to counter with a $20 billion Vitol-backed energy hub in Tanga, reviving old regional rivalries over who controls East Africa's energy trade.
Dangote's Lamu refinery reignites regional rivalry
Aliko Dangote has agreed to build a $17 billion, 700,000-barrel-per-day refinery on Kenya's Lamu Island, a plant that would process crude oil not just for Kenya but also Uganda, Rwanda, Burundi, South Sudan and the DRC. The project would become Africa's second-largest refinery, behind only Dangote's own plant in Nigeria, and would exceed East Africa's current refined fuel demand of roughly 450,000 bpd.
The three countries first appeared to settle on Tanzania's Tanga before Kenyan President William Ruto pushed the project toward Lamu instead. Tanzanian President Samia Suluhu Hassan publicly rebuked Ruto over the shift, and Dangote's team ultimately picked Lamu after also weighing Uganda's Hoima and Kenya's Mombasa. Ruto's government then moved to secure the deal by pledging Ksh 21.5 billion in seed capital and inviting its neighbors to take stakes.
Tanzania and Uganda counter with a $20 billion hub
Tanzania and Uganda answered by announcing a partnership with energy trader Vitol Bahrain to build a $20 billion regional energy hub in Tanga, signed in Dar es Salaam by the Uganda National Oil Company, the Tanzania Petroleum Development Corporation and Vitol Bahrain. The hub will use the nearly complete East African Crude Oil Pipeline, with Tanga serving as a storage and blending point that gives landlocked Uganda, Rwanda, Burundi and the DRC an alternative to routing fuel through Kenya's Mombasa port or the planned Lamu refinery.
Uganda, meanwhile, is hedging by backing both the Lamu and Tanga projects while also advancing its own UAE-backed $4 billion refinery in Hoima, a 60,000-bpd plant aimed at domestic self-sufficiency by 2030.
An old fight over pipelines resurfaces
The standoff echoes the collapse of the 2014 Uganda-Kenya pipeline deal, when Kampala abandoned a planned joint route to Lamu in 2016 in favor of the cheaper, already-operational Tanga port. Total became the largest shareholder in the resulting pipeline and now owns 62% of the 1,443-km line linking Uganda's oilfields to Tanzania's coast. Kenya and Tanzania are also competing on rail, with Tanzania expanding its Central Corridor and electrified railway while Kenya pushes to finish its own Malaba link by 2027 to keep Ugandan trade anchored to Mombasa.
Source: Oilprice.com
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