Dangote Industries has chosen Lamu, the Kenyan island off the country’s northeastern coast, as the location for a new oil refinery with a processing capacity of 700,000 barrels per day, ending months of speculation over whether the facility would be built in Kenya or Tanzania.
Aliko Dangote (l) picked Kenya for KSh 2.2 trillion oil refinery over Tanzania. Ph Devakumar Edwin, the company’s vice president for oil and gas, confirmed that a site has been identified, soil assessments are already under way, and design and engineering work has commenced. Why was Kenya picked over Tanzania? According to Billionaires Africa, Edwin stated that Kenya had been the preferred destination from the outset. Geopolitical economist Aly-Khan Satchu explained that Lamu Port is emerging as a strong candidate to anchor Kenya’s oil trade, with its deep-water channel and strategic coastal location placing it ahead of other regional options for handling very large crude oil tankers. Satchu noted that the port’s natural depth is its most significant advantage, as it can accommodate the oversized vessels used to transport bulk crude oil, a capacity that many East African ports lack. According to him, this physical characteristic alone makes Lamu a practical choice for any future large-scale petroleum import or export operations. “I think Lamu is well positioned because of the deep water and which allows very large tankers,” he told TUKO.co.ke in an exclusive interview. Lamu has deep water.
Its location along Kenya’s northern coastline also puts it in close proximity to Somalia, a territory believed to hold substantial untapped hydrocarbon reserves. The industry analyst pointed out that this geographical positioning is likely influencing investor and government interest in Lamu as the preferred entry and exit point for oil moving through the region. “Also Lamu’s proximity to Somalia (where we know there are significant hydrocarbons) is I am sure tipping in Lamu’s favour,” he said. Satchu said the potential economic impact on Kenya is considerable. Fuel and energy costs represent the country’s single largest import expenditure, and establishing a dedicated deep-water oil hub at Lamu could meaningfully reduce those costs by streamlining logistics and cutting freight inefficiencies. “The benefit to Kenya will be significant in reducing our biggest single expense item will create jobs and a substantial economy in the area,” he added. How much will the Dangote oil refinery cost?
A company spokesman confirmed the project could cost as much as KSh 2.2 trillion (USD 17 billion), making it the largest refining investment Dangote has undertaken outside Nigeria. Rather than relying on heavy external debt, Dangote Industries plans to finance the Lamu project through internally generated cash flows, bond issuances, and proceeds from a planned initial public offering, the same listing the group has been advancing for its Nigerian refinery while engaging investors in the Middle East. The Lamu refinery is designed to supply Kenya, Uganda, Tanzania, South Sudan, and surrounding markets, which currently import almost all of their refined petroleum products. The facility would be the largest oil-processing plant in East Africa. When combined with the Lagos refinery, which currently processes 650,000 barrels per day and is being expanded to 1.4 million barrels per day by 2028, Dangote’s total refining capacity would climb to 2.1 million barrels per day across both sites. Why did Dangote shun Tannzania? The announcement brings to a close a prolonged period of uncertainty that included a rival proposal. In April, Dangote appeared publicly alongside Kenyan president William Ruto and Ugandan president Yoweri Museveni to unveil plans for a refinery at Tanga on Tanzania’s northeastern coast, connected to Mombasa by pipeline. That proposal stalled after Tanzanian president Samia Suluhu Hassan did not align with the project, prompting the group to shift its focus northward to Kenya. Dangote subsequently met with Suluhu to brief her on the decision and extended an invitation for Tanzania to take part in the Lamu project in a participating capacity.
