Kenya, Uganda to build oil refinery in Tanzania

Kenya and Uganda are advancing discussions to establish a multinational oil refinery in Tanzania—a strategic infrastructure project designed to process crude from East African producers and reduce the region's dependence on imported refined products. The initiative reflects growing momentum toward energy integration within the East African Community (EAC), where four of eight member states (Kenya, Uganda, Tanzania, and South Sudan) hold proven oil reserves.

### What's driving this refinery push?

The East African region currently imports approximately 80% of its refined petroleum products, creating significant foreign exchange exposure and price vulnerability. Kenya's 2023 fuel import bill exceeded $3 billion, while Uganda faces similar pressures as production ramps at Lake Albert. A regional refinery would capture downstream margins, create local jobs, and buffer against global price shocks. Tanzania's geographic position—central to the EAC and proximate to Uganda's oil fields and Kenya's ports—makes it a logical processing hub.

### The business case and timeline

The proposed refinery would process crude from Kenya's Turkana Basin, Uganda's Lake Albert fields, and potentially South Sudan's Nile Delta production, creating economies of scale. Industry sources suggest a greenfield facility would require $2–4 billion in capital investment and 4–6 years to commissioning. Capacity targets range from 40,000 to 100,000 barrels per day, depending on final design. Kenya's National Oil Corporation and Uganda National Oil Company have conducted preliminary feasibility studies; formal negotiations with Tanzania's petroleum ministry are underway.

**Why location and ownership structure matter**

Tanzania's offer of land and tax incentives is attractive, but the refinery's ownership and governance model will determine investor appetite. A joint government entity risks political delays; private consortium leadership (with government stakes) has proven more efficient elsewhere in Africa. Morocco's SAMIR refinery and South Africa's Chevron operations demonstrate that mixed public-private structures succeed when roles are clearly delineated and commercial discipline is enforced.

### Market implications for investors

**Downstream fuel price pressure:** A functioning EAC refinery would increase regional fuel supply, moderating the petrol and diesel prices that have constrained Kenya and Uganda's inflation targets. This benefits import-dependent economies but pressures margins for existing fuel retailers—watch for near-term consolidation in the logistics and distribution sectors.

**Energy security premium:** Countries diversifying away from refined fuel imports typically see improved current account balances. For Kenya, this could ease pressure on the shilling; for Uganda, it strengthens the case for higher crude production. Equity investors in East African energy infrastructure funds should monitor this closely.

**Project risk factors:** Political instability in South Sudan, regulatory uncertainty in Tanzania, and the global energy transition toward renewables all pose execution risk. The refinery makes strategic sense only if operations begin before 2032; delays beyond that undermine the project's energy independence logic.

The EAC refinery represents a high-stakes bet on regional integration and energy sovereignty. If executed as proposed, it signals investor confidence in East Africa's oil sector maturity and could attract additional downstream investment (petrochemicals, lubricants) within 10 years.

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