Uganda steers its crude toward a $20 billion Tanzanian complex and away from Dangote's Lamu plant

The stake offer prices the whole Dangote refinery at about $5 billion, or $1.5 billion divided by 0.3 ^[16]. That is a quarter of the $20 billion attached to the Vitol-backed energy complex that Tanzania and Uganda announced for Tanga ^[15][17]. The two figures are different kinds of number (one is an equity value implied by a stake offer, the other a project headline). The plants would still sell into the same market. Semafor reports that Lamu and the Tanzanian complex will compete directly in supplying refined products across East Africa ^[8].

Only one of them has crude lined up. Uganda, which UNOC's chief corporate officer Tony Otoa said will begin commercial oil production in the coming months, is sending crude to Tanga through the $5.3 billion East African Crude Oil Pipeline ^[3]. Kenyan officials had named Uganda, South Sudan and Kenya as the sources that would keep Lamu at full capacity ^[2]. Otoa said the Hoima and Tanga refineries would complement each other to ensure energy security in the region, and would not compete. "I can't speak for Lamu," he said. ^[5]

The route was fixed before Dangote chose a site. Uganda and Kenya were meant to build a joint pipeline from Lake Albert to Lamu Port, then abandoned it for EACOP with Tanzania, which was 91% complete as of August ^[13]. Dangote then gave up a site at the pipeline's end for Lamu's deep water ^[14]. Within months, the two governments behind the pipeline had announced their own refinery at that end ^[15].

In Semafor's analysis attached to the report, Martin argues the feedstock worry may be overstated for Dangote's balance sheet. Dangote's Lagos refinery ran into domestic supply trouble in Africa's largest oil producer and still ran at full capacity on seaborne imports from several markets ^[18]. Lamu's deepwater port can take very large tankers from around the world ^[19]. The Lagos case shows an import-fed Dangote plant can run at capacity. It says less about cost. Middle East cargoes carry price swings tied to the Iran war, and Lamu Port currently lacks operational oil storage terminals ^[9].

The record allows more than one outcome. Uganda could still allocate crude to Lamu later, since "I can't speak for Lamu" is short of a refusal ^[5]. Lamu could run the Lagos way, buying cargoes on the open market. Or the equity sale could stall if Rwanda, which has confirmed early talks, and Ethiopia, reported to be interested ^[11], decide an import refinery is worth less than the implied $5 billion ^[16].

I think the Lagos route is the most likely, and Uganda's own spending points away from Lamu. On Friday it broke ground on a 320 million liter fuel storage terminal in Kampala ^[10]. Otoa said landlocked Uganda, which now imports its fuel through Kenya and Tanzania, was betting on that infrastructure "to transition from importing products to supplying the region." ^[6] A signed Ugandan crude allocation to Lamu would prove this view wrong.