Lagos (AFP) – Africa’s richest man, Aliko Dangote, will build a 700,000-barrels per day east African oil refinery in Lamu on the Kenya coast, a senior company official said Tuesday, ending speculation over the mega-project’s location. The location of the massive refinery — similar to Dangote’s sprawling complex in Nigeria — was confirmed to AFP by Edwin Devakumar, the vice president in charge of oil and gas at Dangote Industries Limited. It will take around 30 months to build the facility in east Africa’s largest economy, he added.
There have been cryptic and conflicting messages on the project’s location for months, with Tanzania and the Kenyan port of Mombasa also mooted. Nigerian billionaire Dangote was in Tanzania late last month, where he held talks with President Samia Suluhu Hassan and explained “the commercial and technical considerations behind the Group’s decision to locate its planned East African refinery in Lamu,” according to a statement from his office. He also invited Tanzania to participate in the Lamu investment.
His 650,000-bpd refinery in Nigeria, online since 2024, is the largest on the continent and is due to more than double capacity to 1.4 million bpd by 2028 to become the largest in the world.
– Questions remain –
There are still many question marks around the project in Kenya, not least where it will source the oil to refine, and how it will be financed. Kenyan President William Ruto said in April that it would process oil from the Democratic Republic of Congo, Kenya, South Sudan, and Uganda. But Kenya’s oil reserves are yet to be pumped, while DR Congo’s are only coming up in small quantities — around 20,000 bpd, according to the government — and only on the country’s Atlantic coast, some 3,000 kilometres (1,860 miles) from Lamu.
South Sudan’s production is much higher, at around 174,000 barrels per day, according to Juba. But it has historically been piped via neighbouring Sudan. A planned pipeline to Lamu has been stalled by conflict for more than a decade. That leaves Uganda, where crude is due to start being produced next year and sent via a massive new pipeline to Tanzania, though even that can only cater to a maximum of 246,000 bpd.
Although there is clearly demand for a mega-refinery in the region, since none exists in eastern or southern Africa, it could take decades to negotiate the deals and build the pipelines to Kenya, said Wambui Njehu Nzigo, an analyst at Control Risks. “It will require so many different moving parts to fall into place at the right time,” she told AFP.
Most importantly, the Uganda oil wells and pipeline to Tanzania are majority controlled by TotalEnergies, one of Dangote’s biggest rivals. “I don’t understand why Total would give rights to Dangote to refine its oil,” Amne Suedi, head of Tanzania’s Shikani Investment and Advisory group, told AFP. “None of this makes sense,” she said. But she added: “Dangote is a very credible business person. And I don’t think that he would be venturing down this road if there was absolutely no opportunity.”
© 2024 AFP
