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East Africa has spent decades exporting one commodity and importing another. The region holds roughly 4.7 billion barrels of crude oil reserves and more than 70 trillion cubic feet of natural gas across Uganda, South Sudan, Kenya and the DRC, according to the African Energy Commission (AFREC). Yet it imports 100% of its refined fuel after Kenya Petroleum Refineries Limited (KPRL), the region’s last operating refinery, shut down in 2013. Nigerian billionaire Aliko Dangote now says he intends to reverse that equation with a $17 billion (KSh2.2 trillion), 700,000-barrel-per-day refinery on Kenya’s Lamu Island that would process crude for Kenya, Uganda, South Sudan, Rwanda, Burundi and the DRC.
The refinery’s planned capacity of 700,000 barrels per day exceeds East Africa’s current refined fuel demand of roughly 450,000 bpd by about 250,000 bpd, leaving room to supply markets elsewhere on the continent. Lamu’s natural harbor, with drafts reaching 18 meters, can accommodate fully laden Post-Panamax crude tankers carrying up to 2 million barrels, vessels too large to call at Mombasa.
That gives the refinery direct access to long-haul crude imports while providing an export outlet for surplus gasoline, diesel and jet fuel. Construction and operation are projected to create more than 60,000 jobs, making the project one of the largest industrial employers ever proposed for Kenya’s coast.
Situated along the strategic LAPSSET Corridor, the project is already sparking major cross-border private sector partnerships.
Tanzanian billionaire Mohammed Dewji has expressed intent to inject $100 million into the development.
The giant refinery will also test the feasibility of intra-African industrial integration under the African Continental Free Trade Area (AfCFTA). The refinery would be able to process crude from East African producers such as Uganda, South Sudan and Kenya as regional production expands, while also accepting cargoes from larger exporters including Nigeria and Angola. Refined fuels and petrochemical feedstocks could then be sold across the African Continental Free Trade Area (AfCFTA), a 55-country market with 1.4 billion people and a combined GDP of roughly $3.4 trillion that is gradually removing tariffs and other trade barriers on intra-African commerce.
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Kenya’s new mega-project will be encouraged by the success story of Nigeria's Dangote refinery. The Dangote Refinery has transformed Nigeria from an import-dependent nation into an energy-secure hub by eliminating the need to import refined fuel. Commissioned in 2023, the 650,000 bpd refinery meets 100% of Nigeria's total domestic requirements for gasoline, diesel, and jet fuel, stabilizing structural supply shocks with local marketers now able to buy and sell directly. By slashing refined product import bills, the refinery has significantly improved Nigeria's balance of payments. This improved external financial position directly led to Nigeria receiving its first sovereign credit rating upgrade to B in 14 years, helping the country secure loans on more attractive terms. Local refining retains wealth domestically, alleviating massive demand for foreign exchange and helping stabilize local currency fluctuations.
Beyond energy, the facility produces Dangote fertilizer, creating thousands of jobs and reshaping trade flows by exporting clean fuel to other African countries and global markets. And, it has also helped lower Nigeria's emission: by processing crude domestically rather than exporting it to carbon-intensive refineries overseas, the highly energy-efficient plant is expected to eliminate over one million metric tonnes of CO? emissions annually.
As you might expect, Kenya’s proposed project is already facing mounting criticism and opposition. Activists from Greenpeace Africa and local community groups have vigorously rejected the project, warning it could destroy Lamu's delicate UNESCO world heritage marine ecosystem, including vital mangrove forests and coral reefs that sustain local tourism and fisheries. Critics have warned the facility risks becoming a stranded asset as global energy transitions accelerate, potentially locking Kenya into decades of heavy carbon emissions. Human rights and constitutional lawyers have threatened High Court cases, demanding the Kenyan government pause all work until exhaustive, impartial Environmental and Social Impact Assessments (ESIAs) and transparent public participation are fully executed.
Meanwhile, economists note that Dangote Industries' demand for robust anti-dumping protections and tax incentives could spark local backlash if it is perceived to unfairly corner the regional fuel market or stifle fair competition. After all, the Dangote Petroleum Refinery has previously faced legal and regulatory battles with the Nigerian state oil firm (NNPC) and major markers after the company sought to nullify rival import licenses to protect its dominant share, with regulators and marketers arguing it exposes the market to monopoly control.
By Alex Kimani for Oilprice.com
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