Energy & resources, explained.
Dangote Petroleum Refinery and Petrochemicals FZE plant in Ibeju Lekki, Lagos, Nigeria, with the company planning a similar scale plant in Kenya (Damilola Onafuwa/Bloomberg via Getty Images)
Dangote’s Kenyan refinery won’t replace Asia as Australia’s main oil supplier – but it deserves a serious look.
Subscribe to The Informer for monthly expert analysis, and to Events for advance notice of visiting world leaders and distinguished guests.
You may unsubscribe from Lowy Institute newsletters at any time. For information on our privacy practices and how to unsubscribe, see our Privacy Policy.
East African oil could loosen Asia’s grip on Australia’s fuel supplyEast African oil could loosen Asia’s grip on Australia’s fuel supply
Africa’s richest man, Aliko Dangote, is building (Opens in new window) a 700,000-barrels-per-day (bpd) oil refinery in Lamu Port in Kenya on the Indian Ocean shores. Once completed, it offers Australia a chance to diversify its oil supplies west of the Indian Ocean.
The conflict in the Middle East and the subsequent supply chain disruptions in the Strait of Hormuz exposed Australia’s fuel vulnerabilities, driving energy prices (Opens in new window) higher. While Australia is a major net exporter of energy, driven largely by its exports of thermal coal and liquefied natural gas (LNG), it is a net importer (Opens in new window) of oil, relying heavily on overseas supplies of refined products including diesel, petrol, and jet fuel, mainly from Singapore, South Korea and Malaysia. These Asian refiners obtain their crude oil mainly from the Middle East, and the conflict in the region has recently affected their production. In 2023, for example, Australia exported 94% of its crude products (oil, condensate and liquefied petroleum gas) and imported about 90% (Opens in new window) of its oil requirements.
Although Australia is ramping up domestic exploration (Opens in new window), reliance on overseas supplies will continue for now. Asian neighbours will undoubtedly remain Australia’s largest oil suppliers, but the Iran war showed there is room for Australia to look for alternative sources before the next crisis.
Most of Australia’s current suppliers are also located within a highly contested (Opens in new window) Indo-Pacific. The South China Sea and the Taiwan Strait remain vulnerable maritime routes, and a potential blockage could disrupt Australia’s petroleum supplies. Australia urgently needs alternatives.
Ethiopia's Prime Minister Abiy Ahmed, Uganda's President Yoweri Museveni, Kenya's President William Ruto, Dangote Group president and chief executive Aliko Dangote, former Nigerian president Olusegun Obasanjo, Benin's President Romuald Wadagni and Togo's President Jean-Lucien Savi de Tove during the groundbreaking ceremony of the Dangote East Africa Petroleum Refinery at Lamu Port in Kililana, Lamu West, 30 September 2026 (Luis Tato/AFP via Getty Images)
The Dangote East Africa Refinery will cost upwards of US$16 billion, with the aim to be completed around 2030. It will use Kenya’s oil production and potentially that of other countries (Opens in new window) in the region, including South Sudan, Angola, Nigeria, and Uganda. A groundbreaking ceremony for the refinery took place on 30 September 2026, with Dangote having moved massive amounts of machinery (Opens in new window) to Lamu to begin work. The Dangote group would have a 70% stake (Opens in new window) in the refinery, and the remaining 30% to be shared by countries in the region.
An East African energy corridor is emerging. On the same western Indian Ocean coastline, just below the Kenya–Tanzania border, sits Tanga Port (located in Tanzania), where the 1,447-kilometre East Africa Crude Oil Pipeline (Opens in new window) (EACOP) terminates. This pipeline, estimated to have a peak capacity of 246,000 bpd, is now at 93% completion (Opens in new window) and will transport Uganda’s crude oil from Kabaale in Hoima to Tanga for export to international markets. Uganda is also building its own small refinery capable of processing about 60,000 bpd (Opens in new window).
The objective is not to build Australia's future around African oil, but to explore additional Indian Ocean supply options while reducing fossil-fuel dependence.
The arrival of Dangote in the Kenyan energy sector supports Nairobi’s long-conceived dream of creating a developmental corridor, the Lamu Port-South Sudan-Ethiopia Transport (Opens in new window) (LAPSSET) Corridor, which features several cross-border connectivity projects, including ports, pipelines, highways, and rail lines, and aims to open the landlocked region to business and development. While the logistical arrangements for transporting crude oil from other African producers, including South Sudan, Angola, and West African countries, to the refinery remain uncertain, Uganda’s crude oil can be transported relatively efficiently from Tanga to Lamu. Kenya’s crude oil resources from the Lokichar Basin in the northern part of the country are expected to supply feedstock to the proposed Lamu refinery.
Australia should pay attention for three main reasons. First, for diversification. East Africa will offer Australia as another source of petroleum supply in addition to its current concentration in Asia. Australia has recently been forced to look as far as Canada (Opens in new window) to offset the fuel crisis. If East African oil starts flowing, this would be a much closer and potentially cheaper option.
Second, Lamu and Tanga sit within Australia’s broader Indian Ocean strategic environment. Western Australia not only faces the Indian Ocean but is also Australia’s closest major geographic region to East Africa (just under 10,000 kilometres). Australia recognises the significance of the Indian Ocean, and yet “barely looks West (Opens in new window)”, paying more attention to the Pacific. An oil hub growing along the shores of the Indian Ocean offers a reason to shift view.
Finally, for economic diplomacy, Australia should strengthen relations with Africa, starting with littoral states such as Kenya and Tanzania, which serve as gateways to the interior. Australia could engage early in Africa’s emerging energy markets rather than arriving after the infrastructure has already been built. Dangote Group’s Nigeria-based facility – the largest refinery in Africa and the world’s 7th largest – has become Europe’s largest (Opens in new window) supplier of jet fuel, overtaking American suppliers. Africa also matters to Australia’s campaign to win a non-permanent seat on the UN Security Council in 2029.
Two considerations remain.
First, although Western Australia offers a potential entry point for East African petroleum, the closure of the Kwinana (Opens in new window) refinery means any opportunity would depend on import-terminal capacity, distribution infrastructure and the commercial viability of supplying refineries, such as Geelong on the other side of the country.
Second, energy security must be balanced against the clean-energy transition. While liquid fuels will remain essential (Opens in new window) to several sectors, potential East African supply arrangements must be assessed against likely demand, emissions and commercial viability. The objective is not to build Australia’s future around African oil, but to explore additional Indian Ocean supply options while reducing fossil-fuel dependence.
About the author
Joel Odota
Joel Odota (Opens in new window) is a PhD candidate at the Centre for Australia-Africa Relations, Curtin University, Australia.
The most-pressing world events explained by Lowy Institute experts and global contributors, in your inbox, every Thursday.
You may unsubscribe from The Interpreter at any time. For information on our privacy practices and how to unsubscribe, see our Privacy Policy.
