Dangote Vows To Build Nigeria-Style Oil Refinery In Tanzania

Aliko Dangote, Africa’s richest man, pledged to help East African nations build a new oil refinery in Tanzania, as the war in Iran exposes the continent’s over-reliance on fuel imports from the Middle East.

The project will include a pipeline that links the Kenyan port city of Mombasa to the northeastern Tanzanian harbor of Tanga, where the facility will be situated, Kenyan President William Ruto said at an Africa Finance Corp. summit in Nairobi on Thursday. The refinery will process crude from countries including the Democratic Republic of Congo and South Sudan, he said.

“We are discussing that we are going to have a joint refinery in Tanga to benefit all of us,” Dangote said at the forum. “My commitment today here is that we will lead the refinery. We’ll make sure that that refinery is built within the next four, five years.”

Africa, which accounts for about 7% of the world’s crude output, had seen refining capacity shrink by about a third in the past two decades before Dangote started his facility in Nigeria. The continent’s biggest refinery reached full capacity weeks before the conflict in Iran and has helped Nigeria become self-sufficient in fuel.

Other nations want to now emulate that success and insulate themselves from future shocks.

The plans to build the facility in Tanzania coincide with Dangote’s $40-billion expansion of his industrial empire, aimed at more than doubling capacity at his 650,000 barrel-a-day plant in Lagos. Tanga is the end-point of a 1,443 kilometer (897-mile) pipeline that will link the Tanzanian harbor with oil fields in Uganda.

“I can give commitment to the two presidents that were here, if they will support the refinery, we’ll build the identical one that we have in Nigeria,” Dangote said on a panel discussion that included Ruto and Ugandan President Yoweri Museveni.

The fallout from the conflict in the Persian Gulf has strained fuel and fertilizer supply chains, sharpening the vulnerability of import-dependent African economies and driving more countries to source supplies from Dangote’s refinery, which is shipping products as far as Tanzania and sending record volumes of jet fuel to Europe.

Some eastern and southern African nations rely on the Middle East for three-quarters or more of their fuel imports, leaving them acutely exposed to disruptions, according to energy consultancy CITAC. Kenya is particularly vulnerable, having renewed supply deals with Saudi Aramco Oil Co., Abu Dhabi National Oil Co. and Emirates National Oil Co. — all Gulf-based — just last year.

The region’s dependence reflects years of underinvestment, with refineries from Mombasa and the Zambian capital, Lusaka, to Durban in South Africa and Limbe in Cameroon shuttered over the past decade. Some countries on the continent are pushing ahead with refinery projects to reduce their import dependence.

Mozambique has drawn interest from Nigerian tycoon Benedict Peters for a proposed 200,000 barrel-a-day facility.

Museveni said that Uganda will retain its existing plan to build a 60,000 barrel-per-day refinery for domestic consumption and to supply areas near its border with Kenya and Tanzania. Uganda will also contribute some crude to the Tanga refinery, he said.