A limited early oil pilot never developed into sustained production, and British oil explorer Tullow Oil, which led development of the Turkana fields, agreed in 2025 to sell its Kenyan interests to Gulf Energy after years of financing and infrastructure delays.
Kenya now targets initial output of about 20,000 barrels per day, rising towards 50,000 from 2032, while earlier projections put eventual production at 120,000 barrels per day.
Even under that higher projection, domestic crude would cover only about 17 per cent of Dangote’s planned refinery capacity, while initial output would meet less than 3 per cent.
Lessons from Nigeria
His Lagos refinery was built partly to address one of Nigeria’s biggest petroleum contradictions, where the country exported crude while importing large volumes of petrol and diesel because its state-owned refineries had remained largely ineffective.
The project eventually cost about $20 billion and suffered years of delays before production began, but Dangote still struggled to secure enough Nigerian crude after commissioning and at times imported supplies from overseas, including the United States.
That experience appears to have shaped his thinking in Kenya, where access to a deep-water port and a large regional market may matter more than substantial domestic crude production.
“An oil refinery doesn’t have to be set up where crude oil is,” he said ahead of the groundbreaking, citing Singapore and India as examples of countries that developed major refining industries despite having little domestic crude.
Why Lamu won
That thinking is central to understanding Lamu, whose naturally deep harbour can receive large crude carriers while its position on the Indian Ocean and the LAPSSET corridor gives Dangote access to international oil supplies and a potential gateway into East African markets.
“Crude will come from all the East African countries that are producing oil; we will give them the priority, and then we will get more from the Middle East and everywhere,” Dangote said.
The billionaire had considered Tanga in Tanzania and Mombasa before choosing Lamu, citing its land, water supply and sea depth as better suited to a refinery of this scale.
“The most suitable place where we realised we can put up this refinery, where we have enough water, we have depth in terms of the sea, and we have land is Lamu,” he said.
The location, however, solves only part of the equation, as Kenya cannot consume enough fuel to sustain the refinery at high capacity, forcing Dangote to secure markets in Uganda, Ethiopia, Rwanda, Burundi, South Sudan and beyond while competing with established importers and Uganda’s planned 60,000-barrel-per-day Hoima refinery.
The EV question
Beyond that, securing regional markets is only part of the challenge; Dangote must also bet that fuel demand will remain strong even as electric vehicles reshape global transport.
The International Energy Agency expects EVs to displace millions of barrels of daily oil demand by the end of the decade, creating a long-term risk for a refinery built to operate for decades.
Dangote, however, argues that oil demand extends beyond road transport. “Oil is here to stay for a very, very long time,” he said, noting that the Lamu plant would produce petrol, diesel and jet fuel, as well as polypropylene and base oils.
That distinction matters because EVs can reduce petrol demand without eliminating aviation fuel, heavy transport, petrochemicals, lubricants or plastics.
Energy analysts expect Africa’s oil demand to remain resilient for decades, while OPEC projects global consumption will continue rising through 2050, supporting Dangote’s bet that East Africa could move through the energy transition more slowly than Europe, China and other advanced markets.
That wager also has a powerful counterpoint in the United States, the world’s largest oil producer, where President Donald Trump returned to office promising to “drill, baby, drill” and expand fossil-fuel production, slowing the momentum of the EV-led shift in one of the world’s biggest energy markets.
Even so, Dangote’s gamble remains significant because the refinery could come onstream just as global refining competition intensifies and road-fuel demand begins to flatten.
Source: africa.businessinsider.com
