Uganda’s Oil Refinery Remains on Course as Dangote Spreads Wings into East Africa

On 17 May, Dangote met with Uganda’s President Yoweri Museveni in Kampala where they discussed the proposed East African regional oil refinery and related strategic investment opportunities aimed at strengthening regional industrialisation and economic transformation. Museveni supports the regional oil refinery initiative in order to advance the region’s industrial growth; reaffirming Uganda’s commitment to East Africa’s regional integration and industrial transformation. According to Museveni, Uganda is set to participate in the regional oil refinery; even if it means holding shares saying the initiative aligns with Uganda’s long-standing position of promoting value addition and reducing the export of raw materials. Museveni insists that Africa’s economic future lies in processing its natural resources locally so as to create jobs, expand industries and strengthen self-sustaining economies. He, however, said that Uganda’s national oil refinery plan in Hoima remains on course. “Uganda’s mineral wealth must work for the people of Uganda. In line with the directive of President Museveni, Government of Uganda remains committed to ending the export of raw minerals and prioritising value addition, industrialisation, job creation and technology transfer within our country,” at-the-time Energy and Minerals’ minister, Ruth Nankabirwa, said on 15 May: Through stronger collaboration between Government, investors and regulators, “we are safeguarding our natural resources while building a sustainable minerals’ sector that contributes meaningfully to national development, energy security and economic transformation for generations to come.” The proposed regional oil refinery is estimated to cost $15-17 billion. Once operational, it is expected to process 650,000 barrels of crude oil per day (bpd) and is projected to serve several East African countries and probably beyond. An East African refinery would inevitably complement the near-ready Uganda-Tanzania East African Crude Oil Pipeline (EACOP). EACOP is a buried 1,443-km pipeline transporting crude oil from Uganda’s Lake Albert area to Tanzania’s Tanga Port at the Indian Ocean coast. A 24-inch electrically-heated pipeline, six pumping stations, two pressure reduction stations and a marine export terminal constitute EACOP—operated by a company jointly-owned by Total Energies-Uganda, China National Offshore Oil Corporation-Uganda Limited (CNOOC), Uganda National Oil Company and Tanzania Petroleum Development Corporation. The EACOP pipeline carries government and joint venture-owned oil to Tanga for international sales. Ownership of the oil remains with Uganda’s government and the Upstream Joint Venture Partners. Uganda has taken a significant step in its oil and gas sector with the signing of a historic agreement for the construction of a crude oil refinery in Hoima District. The agreement, already signed in the presence of President Museveni, sets the framework for investment timelines and obligations between the Government of Uganda and Alpha MBM Investments LLC, a company owned by Sheikh Mohammed bin Maktoum bin Juma Al Maktoum of the Dubai Royal Family. The refinery will have a capacity of 60,000 barrels per day and is expected to be completed within three years. The project also includes the construction of a 320-million-litre Kampala Storage Terminal in Mpigi District and a 212-kilometre finished product pipeline linking the refinery to the terminal. Additionally, the Mbegu water abstraction facility in Hoima District will be developed as part of the infrastructure. The Uganda refinery pipeline will begin at the Uganda Oil Refinery at Kabaale Township, Buseruka Sub-county, Hoima District in mid-Western Uganda near the international border with the Democratic Republic of Congo (DRC). Measuring a total length of 211 kilometres or 131 miles, the pipeline then will end at an oil products distribution terminal to be constructed in the neighbourhood of Buloba near the capital, Kampala. The envisioned pipeline will transport various products like jet fuel, gasoline, kerosene and diesel. And from Buloba, the products will be distributed by truck to various locations in Uganda. Buloba will also be the point of sale to the international market of any excess petroleum products. Dangote, on the other hand, envisages the dream project enhancing regional energy security, reducing petroleum imports and creating employment opportunities for East Africans. But Dangote’s mega oil refinery at the coast in the Indian Ocean is said to be threatening the future and sustainability of Uganda’s inland oil refinery project; although Uganda’s energy experts are upbeat that there is nothing to fear about Dangote’s mega project. Dangote has now settled for Mombasa Port in Kenya instead of Dar-es-Salaam in Tanzania. Uganda is a land-locked country. “We want to establish a refinery that can support East Africa’s growing energy needs, jobs will not be a problem. In our refinery in Nigeria, we employ people from many nationalities and East Africans will also benefit from this project. I congratulate Your Excellency upon your inauguration and pray that the Almighty God keeps you safe, healthy and strong as you continue leading Uganda,” Dangote told Museveni who was sworn-in on 12 May for the seventh elective term which ushers him into 45 uninterrupted years in power by 2031. Pitching camp in the region, Dangote went ahead to meet Tanzania’s President Samia Suluhu Hassan the following day in which they got soaked in high-level discussions on industrialisation, regional energy infrastructure, refining capacity and long-term economic development across Africa. “As African nations continue to prioritise energy security, local production and infrastructure expansion, collaboration between governments and industrial institutions will play a critical role in shaping the continent’s economic future. Dangote Group remains committed to supporting Africa’s industrial growth through long-term investment, large-scale infrastructure and production capacity that strengthens regional development and economic resilience,” the Group said in a statement posted on X, 18 May. As some powerful groups like IMF oppose the 1.2 million bpd proposal stretching up to the DRC, Dangote has had oil refinery talks with Kenya’s President William Ruto and major industrial investment plans with Ethiopia, too, are afoot. “New demands by Aliko Dangote for the East African regional refinery to proceed includes favourable [or] cheap land compared to the $100 million land he acquired in Nigeria during the construction of the $20 billion refinery, anti-dumping protections meaning East African countries will need to stop importing fuel and only depend on his refinery and finally state partnership,” opines South Sudanese Structural Civil Engineer, Andrew Akech. “Land and anti-dumping protection will present a huge challenge since Mombasa may not have cheap land and some big profiles are involved in oil and gas business in East Africa. President Museveni wants the project sooner than later but location depends entirely on Tanzania and Kenya [which have coastal access to the Indian Ocean]. Tanga [Port in Tanzania] and Mombasa [Kenya’s main Port and regional maritime artery] lock horns,” Akech adds. Uganda’s 2016 decision and choice of the Kabaale (Hoima)-Tanga (Tanzania) Route instead of Mombasa in Kenya for its oil export considering it the most cost-effective and technically-sound option after thorough route evaluation—EACOP—is said to have jolted Kenya. The joint Boards of the Petroleum Authority of Uganda (PAU) and Ewura Tanzania on 16 May, meanwhile, kicked off a four-day visit to the Tilenga Project where French Total Energies is about to start pumping oil in Buliisa district from mid-western Uganda. According to PAU, the delegation also visited the CNOOC-run Kingfisher Project where they received an overall project update at the Escarpment View Point before proceeding to Wellpad-2 to observe ongoing completion operations. “The project remains on schedule with over 79% completion rate,” PAU said in a statement on 18 May. “…The team visited Pump S1, the starting point of the EACOP, where discussions focused on key issues including pre-commissioning preparations…with a visit to the Kabalega International Airport in Hoima, where the delegation appreciated the strategic role of the airport in supporting the planned refinery development and KIP [Kabalega Industrial Park] activities,” PAU statement adds. Although the East African region is naturally endowed with oil and gas deposits, it is Uganda which had finally scheduled June/July 2026 as the advent of the region’s first-ever pump oil delivery with October expected to commence commercial oil exports to the international markets through EACOP from mid-western Uganda to the Indian Ocean coastal Port of Tanga in Tanzania. Land-connected Uganda is a land-locked country with marine access being Kenya and Tanzania. Uganda discovered oil for commercial production in June 2006; estimated at 6.5 billion barrels of oil; with about 1.4 billion barrels recoverable. Peak production is expected to surpass 200, 000 bpd. Gas resources are estimated at 600 billion cubic feet, of which an approximate 500 billion cubic feet are estimably recoverable. Approximately $10 billion has already been invested in the sector; with an additional $400 million required annually to sustain operations. The country will retain some crude for domestic use as the rest are destined for refining at a foreseen $2.5 trillion refinery for the export market through EACOP via Tanzania’s Tanga Port at the Indian Ocean. Said PAU in March on Uganda building both a refinery and EACOP: “Refinery 60,000 barrels per day [is] energy security for Ugandans; EACOP [is for] market profits.” EACOP reached a defining milestone in February with the arrival of the final batch of pipes in Tanga completing the full 1,443km required to link Uganda to international markets. As the pipeline edges closer to operations, Uganda moves within reach of unlocking the $1-2.5 billion in annual revenues, as achievement that is set to trigger economic growth, expand infrastructure and create shared prosperity in East Africa. “There are still opportunities in the midstream projects, more so the refinery project which includes the 200km products pipeline,” PAU Manager Corporate Affairs, Gloria Sebikari told Pan African Visions exclusively on 7 May. “Opportunities for service provision at the 29.57 km2 oil and gas industrial park which will host Uganda’s 2nd International Airport,” she continued, “Crude Oil Export Hub and Uganda Refinery as anchor projects; industrial gases; and other projects and facilities such as polymer, fertiliser, mixed industries, afro-processors, warehousing and logistics among others. Refinery Project opportunities post FID [Final Investment Decision].” Flipping through the archives to revisit some of the landmark moments that have shaped Uganda’s petroleum sector on 2 July, PAU reveals that commercially viable oil resources in the Albertine Graben were discovered in 2006, setting Uganda on the path to becoming an oil-producing nation. According to PAU, in 2008, approval of the National Oil and Gas Policy for Uganda on 30 January 2008 was done; providing the strategic framework for the sustainable development of the country’s petroleum resources. The Enactment of the Petroleum (Exploration, Development and Production) and the Petroleum (Refining, Conversion, Transmission and Midstream Storage), establishing the legal and institutional framework for the petroleum sector was effected in 2013. In 2016, says PAU, the Award of Development and Production Licences for key oil fields in the Lake Albert Basin, paved the way for commercial petroleum development right before Uganda and Tanzania could sign the Inter-Governmental Agreement (IGA) for the EACOP on 26 May 2017, advancing regional energy cooperation and export infrastructure. The announcement of FID for the Tilenga, Kingfisher and EACOP projects were made on 1 February 2022. This announcement unlocked approximately US$ 10 billion in investment. The first development wells for the Kingfisher and Tilenga projects were successfully spudded in 2023 which marked the start and the beginning of the drilling phase for Uganda’s oil production projects. Uganda’s oil journey then subsequently achieved a major milestone with four drilling rigs operating concurrently across the country by 2024; reflecting the acceleration with which the project is being executed. FID is all investors in the deal confirming their commitment under a shareholders’ agreement to invest equity. The 1 February 2022 FID unleashed an unprecedented US$15 billion investment flow into Uganda’s economy; making it the largest project by value in Uganda and the entire East African region. This milestone did not only pave the way for transformative infrastructure; but it cemented Uganda’s place on the global energy map. The PAU monitors and regulates the Petroleum Sector in Uganda to create lasting value for society and a sound investment destination.