Kenya and Tanzania are pushing competing mega-projects at Lamu and Tanga to claim the role of regional petroleum gateway — a contest that matters for fuel security, landlocked markets and investor returns.
Lamu bets on Dangote’s US$17bn refinery
Kenya has moved the proposed Dangote refinery from an earlier idea in Tanga to its Lamu coast, positioning the project as a flagship for regional energy and transit ambitions. Aliko Dangote plans a large-scale crude refinery in Lamu with an estimated cost of about US$17bn, backed by Kenya’s leadership and pitched to neighbours as a regional supply solution. The planned facility is expected to process around 700,000 barrels of crude per day and serve markets across Kenya, Uganda, South Sudan, Rwanda, Burundi and the Democratic Republic of Congo, sharply cutting import dependence for refined products.
Kenya’s Prime Cabinet Secretary Musalia Mudavadi has framed the initiative as part of Nairobi’s obligation to support landlocked economies that rely on its corridors for fuel and goods. He has argued that Kenya is a critical transit and logistics nation, and that investors are attracted by its role in serving multiple hinterland markets. This narrative aligns with Lamu’s integration into the broader Lamu Port–South Sudan–Ethiopia Transport (LAPSSET) scheme, which aims to connect new oil and freight routes from the interior to the Indian Ocean.
Meanwhile, Kenya retains a clear logistics lead today. Port statistics compiled by transport industry analysts show Mombasa port handled about 45.45 million tonnes of cargo in 2025 — a record and a gain of almost 11 percent year on year. By contrast, Dar es Salaam’s throughput for FY2024/25 stood near 27.7 million tonnes, though volumes are rising fast with strong growth booked into FY2025/26. For investors, these numbers confirm that Kenya starts this race with deeper corridor reach and more established regional traffic.
The proposed Lamu refinery remains in planning and pre-construction stages, with geotechnical work underway and ground-breaking targeted around late 2026. However, Dangote has recently indicated that cost estimates could be revised towards US$16bn due to construction learnings and a compressed build programme. One observation stands out: East Africa is moving from discussing refinery capacity to competing for who controls it.
Tanga’s US$20bn-plus energy hub raises the stakes
Tanzania and Uganda have responded with a high-profile push to turn Tanga into a regional petroleum gateway. In early August 2026, the Uganda National Oil Company (UNOC), Tanzania Petroleum Development Corporation (TPDC) and Vitol Bahrain EC signed a memorandum of understanding to develop a multi-asset energy hub at Tanga. Governments valued the deal at more than US$20bn. Media reports from Kampala and Dar es Salaam say the concept includes a refinery complementing Uganda’s planned 60,000-barrel-per-day Hoima refinery at Kabaale, a bidirectional refined-products pipeline, tank storage farms, a marine terminal and jetty, and a natural gas pipeline linking Uganda and Tanzania.
The Tanga plan is explicitly designed to build on the East African Crude Oil Pipeline (EACOP) — the 1,443-kilometre line from Uganda’s Lake Albert fields to the Chongoleani terminal near Tanga, engineered to carry up to 216,000 barrels per day initially. By adding local refining, product pipelines and gas links, Tanzania and Uganda aim to shift from exporting crude to trading and distributing refined fuels across East and Central Africa. Tanzanian officials have presented the hub as an answer to what follows EACOP’s completion, stressing energy security, regional trade and employment for a young population.
Environmental groups in Tanga have raised questions about consultation and conservation, echoing concerns already voiced around Lamu. For long-term investors, these challenges highlight permitting and social licence as key non-financial risks, alongside execution and cross-border coordination. High-level diplomacy is also anchoring the Tanzanian offer. President Samia Suluhu Hassan has recently hosted Uganda’s President Yoweri Museveni and the Democratic Republic of Congo’s President Félix Tshisekedi, with talks focused on energy, mining and transport links along the Central Corridor and the standard gauge railway.
What does the deal mean for investors?
Parallel projects at Lamu and Tanga could reshape how landlocked producers and consumers source fuel and access the Indian Ocean. The Lamu refinery and Tanga hub each promise new flows of crude and products, deeper integration with rail and pipeline networks, and potential price spreads between the two corridors. As a result, investors will need to map exposure across both chains, rather than backing one route alone. For context on how Africa’s broader power infrastructure race is playing out, Africa’s power transmission investment wave offers useful framing.
The emerging rivalry is less a zero-sum contest than a test of regional coordination. If Kenya and Tanzania align projects with industrialisation, demand growth and shared logistics, both Lamu and Tanga can support diversified supply, lower freight costs and more resilient fuel markets. As reported by The East African, the competition is intensifying as both governments seek anchor commitments from landlocked neighbours. Over the next five years, investors should watch for final investment decisions on the Lamu refinery, concrete scope and financing terms for the Tanga hub, and how quickly landlocked economies commit anchor volumes to each corridor.
Quick answers
The planned Lamu refinery is estimated to cost around US$17bn and is designed to process approximately 700,000 barrels of crude per day, serving Kenya and several landlocked neighbours.
The Tanga hub, valued at more than US$20bn, involves UNOC, TPDC and Vitol Bahrain EC and covers a refinery, a bidirectional refined-products pipeline, tank storage, a marine terminal, and a natural gas pipeline linking Uganda and Tanzania.
Mombasa handled about 45.45 million tonnes of cargo in 2025, up nearly 11 percent year on year, while Dar es Salaam processed around 27.7 million tonnes in FY2024/25, with volumes growing rapidly.
