East Africa's refinery rivals take on Dangote

East Africa's Dangote Refinery rivals are taking aim at the planned Lamu refinery in Kenya. Uganda's noncommitment to the project has sparked a race to determine which country will emerge as the dominant energy hub in the region. Uganda's National Oil Corporation (UNOC) chief corporate officer, Tony Otoa, revealed that the country is banking on two key refinery projects, including the $20 billion Tanzania refinery and energy complex and a $5.3 billion East African Crude Oil Pipeline (EACOP) to supply crude.

The Hoima refinery in Uganda, with a capacity of 60,000 barrels per day, will primarily serve Uganda and the regional market. Otoa stated that the two refineries, Hoima and Tanga, will complement each other in ensuring energy security in the region, rather than directly competing. Seaborne imports from the Middle East and other markets are a viable option for Dangote's Lamu refinery, but come with challenges such as price volatility and the lack of operational oil storage terminals at the Lamu Port.

Uganda has broken ground on a 320 million liter fuel capacity storage terminal in Kampala to support regional and national fuel reserves. However, the reliance on international markets for crude supply remains uncertain due to factors like the Iran war and the incomplete development of a new pipeline for South Sudan. East African countries have been invited to invest in Dangote's refinery, with Rwanda's President Paul Kagame confirming early discussions and Ethiopia reportedly showing interest.

Despite potential feedstock challenges, Dangote Industries has not expressed concerns regarding the competition with the Tanzania refinery, citing Lamu's deepwater port as a strategic advantage. The Lamu refinery is being designed to handle a wider range of crude types, allowing it to switch between international and regional sources, similar to the strategy employed by Dangote's Lagos refinery.