East Africa oil refinery race heats up as Tanzania faces Kenya

Mr Dangote was recently quoted by the Financial Times indicating preference for Mombasa, citing its larger port infrastructure and stronger fuel market.

The remarks mark a shift from earlier regional expectations that had largely placed Tanga as the likely location, partly due to its link with the East African Crude Oil Pipeline (EACOP).

Officials at the Ministry of Energy declined to comment on whether formal negotiations are ongoing.

However, experts say the stakes for Tanzania are significant, both economically and strategically.

A Senior Lecturer in Economics at the Open University of Tanzania, Dr Lawi Yohana, said Tanzania still holds a starong position due to existing and emerging infrastructure.

He said the EACOP project is a key advantage, as it guarantees access to crude oil feedstock, a critical requirement for refinery operations.

“Tanga is economically well-positioned because Tanzania already has critical infrastructure in place through EACOP,” he said.

Dr Yohana noted that Uganda’s oil reserves, which will supply the pipeline, are commercially stronger than Kenya’s currently known reserves, giving Tanzania a comparative advantage.

He added that if Tanzania eventually discovers its own oil reserves, having refining capacity already in place would become strategically important.

“If Tanzania discovers oil later, having downstream refining infrastructure already established would become strategically significant,” he said.

He said the refinery should be viewed as a regional industrial asset capable of supplying petroleum products across the East African Community (EAC) and the Southern African Development Community (SADC).

He also noted that refineries typically attract wider industrial ecosystems, including plastics, fertiliser, chemicals and packaging industries.

“This is not just about fuel. Refineries attract many interconnected industries,” he said.

Dr Yohana added that Tanzania’s political stability and relatively strong security environment could also enhance its attractiveness to long-term investors.

However, he warned that Tanzania must not assume Tanga will automatically win the project simply because EACOP terminates there.

He said competition is now driven by commercial incentives, tax regimes, regulatory clarity and government responsiveness.

Kenya’s renewed push complicates the picture, particularly after Uganda selected Tanzania over Kenya for the EACOP route, shifting billions of dollars in infrastructure investment away from the Lamu corridor.

That earlier decision was based on lower costs, shorter distances and greater political stability in Tanzania.

Analysts now say the refinery debate represents a second phase of regional competition in the energy sector.

Executive Director of the Tanzania Association of Oil Marketing Companies (TAOMAC), Mr Raphael Mgaya, said the refinery remains strategically important regardless of location.

He said East Africa remains heavily dependent on imported refined petroleum products, mainly from the Middle East, exposing the region to global price shocks and shipping risks.

“Accessing refined products closer to the region reduces risk and improves reliability,” he said.

Financial analyst Mr Christopher Makombe said a regional refinery would help reduce foreign exchange pressure and improve energy security.

However, he stressed that Tanzania must actively compete for the investment.

“The government must provide superior tax or regulatory incentives and political certainty in order to win the project from Kenya,” he said.

For now, the final location of the refinery remains undecided, but analysts agree the contest is no longer just about infrastructure. It is increasingly about which country will anchor East Africa’s future energy system, industrial growth and regional logistics network.