Kenya could soon begin building a refinery capable of processing more oil than the country consumes, but there is one major complication: Kenya does not currently produce commercial quantities of crude oil.
Nigerian billionaire Aliko Dangote plans to construct a massive oil refinery within the Lamu Port-South Sudan-Ethiopia Transport Corridor Special Economic Zone.
The proposed plant would process as much as 700,000 barrels of crude oil a day, making it the largest refinery in East Africa and one of the biggest industrial investments ever undertaken in Kenya.
Dangote Industries says preliminary engineering and soil testing have started, with the refinery targeted for completion by 2030.
But before Kenya celebrates the end of imported fuel, several difficult questions must be answered. Where will the crude oil come from? Who will finance the project? Where will all the finished fuel be sold—and will any of this make petrol cheaper for Kenyan motorists?
Dangote’s proposed Lamu refinery at a glance
| Project detail | Current proposal |
|---|---|
| Location | LAPSSET Special Economic Zone, Lamu |
| Estimated cost | $15–17 billion |
| Processing capacity | Up to 700,000 barrels a day |
| Proposed completion | 2030 |
| Expected market | Kenya and neighbouring countries |
| Financing | Company funds, bonds, an IPO and possible regional investment |
| Current status | Site work, soil testing and engineering reported to have begun |
These figures describe the proposal as currently presented. They should not be confused with a fully completed financing and construction plan.
Why Dangote chose Lamu
Dangote initially considered building the East African refinery in Tanzania. Mombasa was also mentioned before Lamu emerged as the preferred location.
Lamu offers a deep-water port capable of receiving large crude-oil tankers. It is also positioned to serve markets in Kenya, Uganda, Rwanda, Ethiopia, South Sudan and other parts of the region.
The refinery could become the anchor project that the ambitious LAPSSET corridor has lacked. Conceived more than a decade ago, LAPSSET was supposed to connect Lamu Port with northern Kenya, Ethiopia and South Sudan through roads, railways, pipelines and other infrastructure.
Much of that wider vision remains unfinished.
A refinery would create demand for storage terminals, pipelines, electricity, water, roads and port services. It could also attract associated industries producing fertiliser, plastics, cooking gas and other petrochemical products.
Kenya has not operated a refinery since the Mombasa facility closed in 2013. It currently imports almost all its petroleum products in refined form, spending approximately $4 billion—or about KSh511.5 billion—on them in 2025.
Where will the crude oil come from?
This is the project’s most important unanswered question.
A refinery does not produce oil. It converts crude oil into products such as petrol, diesel, kerosene, jet fuel and cooking gas.
Unlike Nigeria, which has substantial oil production, Kenya has struggled for years to commercialise its discoveries in the South Lokichar Basin.
President William Ruto’s economic adviser David Ndii has suggested that Kenya, Uganda and South Sudan could provide up to 600,000 barrels of crude oil a day. However, getting that oil to Lamu would be extremely difficult under the infrastructure currently in place.
Uganda is developing the East African Crude Oil Pipeline to transport its oil to Tanzania’s Tanga port—not Lamu.
South Sudan produces oil, but its exports currently travel through Sudan. Conflict and repeated damage to that route have exposed how vulnerable the country’s production can be.
Kenya has oil deposits in Turkana, but commercial production and the proposed pipeline from Lokichar to Lamu have suffered years of delays.
Without new pipelines or alternative supply agreements, the refinery would have to import crude by sea, probably from the Middle East or other international producers.
That would still allow Kenya to replace imports of finished petroleum products with imports of crude oil. But it would also leave the refinery exposed to global oil prices, shipping costs and geopolitical disruptions.
Is there a market for such a large refinery?
A capacity of 700,000 barrels a day is far beyond Kenya’s domestic requirements. The project can therefore only make commercial sense as a regional refinery.
Dangote would need customers across East and Central Africa, potentially extending to international markets through Lamu Port.
That creates an opportunity but also a risk.
Kenya’s port and pipeline network already serves several landlocked countries. Locally refined products could reduce shipping distances and give regional buyers an alternative to fuel imported from the Middle East, India and Europe.
But Dangote would still have to compete on price. Regional countries would not necessarily purchase fuel from Lamu if imported products remained cheaper.
Several governments may also want to protect their own fuel-import arrangements or invest in competing infrastructure. Uganda’s decision to route its future crude exports through Tanzania illustrates how commercial interests and regional politics can reshape energy projects.
Who will pay for the refinery?
Dangote Industries says the project could be financed through internally generated funds, bonds and proceeds from its refinery business’s public listing.
The company has experience developing a project of this scale. Its 650,000-barrel-per-day Lagos refinery began operating in 2024 and helped turn Nigeria from a major fuel importer into an emerging exporter.
That experience also offers a warning.
The Lagos refinery was initially estimated to cost approximately $9 billion. By the time it started operating, its cost had exceeded $20 billion following delays, engineering difficulties, inflation, currency depreciation and a change of location.
A similar cost escalation in Lamu would make an already expensive project considerably harder to finance.
Dangote has also proposed that East African countries could collectively acquire as much as 30 per cent of the refinery. Kenya has been mentioned as a possible shareholder, but no binding investment agreement or final ownership structure has been publicly confirmed.
If public money is involved, the government will need to explain how much Kenya intends to invest, where that money will come from and what return taxpayers should expect.
A groundbreaking ceremony alone will not answer those questions.
Will the refinery make fuel cheaper?
Refining fuel in Kenya could remove some freight and handling costs associated with importing finished petroleum products. It could also improve supply security and reduce the amount of refined fuel purchased from overseas.
However, a local refinery would not automatically deliver cheap petrol.
The final pump price would still include:
- The international cost of crude oil
- Shipping and insurance
- Refining costs and profit margins
- Storage and pipeline charges
- Oil-marketing margins
- Government taxes and levies
If the refinery imports most of its crude, Kenya would remain exposed to global oil prices and foreign-exchange movements.
The largest possible gains may therefore come from reliable regional supply, industrial development and reduced imports of finished products—not necessarily a dramatic fall in prices at petrol stations.
Competition will also matter. A refinery controlling a large share of the regional market would require strong regulation to ensure that replacing foreign suppliers with one dominant local producer does not leave consumers with fewer choices.
Lamu’s opportunity—and its environmental risk
For Lamu, the investment could create construction jobs, new businesses and demand for transport, housing and other services. It could also accelerate development of the port and the wider LAPSSET corridor.
But a refinery of this size would have a significant environmental footprint.
It would require large quantities of land, water and energy, alongside crude-storage tanks, marine terminals and pipelines. Oil spills, industrial emissions and disruption of marine habitats would be serious concerns for fishing communities.
Lamu Old Town, a UNESCO World Heritage Site, is approximately 10 kilometres from the port area. Environmental groups, including Greenpeace Africa, have already raised concerns about possible damage to the region’s coastal ecosystem.
The project will therefore require credible environmental assessment, community consultation and clear safeguards—not only investment announcements.
A transformative project—but not yet a guaranteed one
The proposed Dangote refinery could transform Lamu into a major energy and industrial hub, revive LAPSSET and reduce East Africa’s dependence on imported refined fuel.
Dangote’s successful construction of the Lagos refinery shows that his group can complete projects many once considered impossible.
But Lamu presents a different challenge.
The refinery does not yet have an obvious source for the vast quantity of crude it would require. Much of the supporting infrastructure remains unbuilt, the complete financing plan has not been disclosed and regional governments have not confirmed the investment and purchasing commitments needed to support it.
The real test will not be whether leaders break ground in Lamu. It will be whether Dangote secures financing, environmental approval, crude supplies, infrastructure and long-term customers.
Until then, the refinery should be viewed as a potentially transformative project—but still a proposal with some of its most important pieces unresolved.
