Refinery vs. Pipeline: Museveni’s $4 Billion Energy Bet Raises Regional Stakes

Save as PDF 

Kampala – Uganda’s long-standing dream of becoming a regional energy powerhouse is edging closer to reality. President Yoweri Kaguta Museveni has officially sealed a strategic investment deal worth US$4 billion with the United Arab Emirates’ Alpha MBM Group to construct a 60,000-barrel-per-day oil refinery in the Lake Albert Basin. This landmark agreement, made in partnership with Uganda’s National Oil Company, marks a major step forward in Museveni’s two-decade push to monetize Uganda’s crude resources domestically. However, it simultaneously casts a shadow over the viability of the controversial East African Crude Oil Pipeline (EACOP) project.

AfricaHeadline Reports Team
editorial@dw-demosnewstaion.online 

The planned refinery will be built near the western town of Hoima, strategically located close to Uganda’s oil fields, where reserves are estimated at over 6.5 billion barrels. According to officials, the refinery will process crude oil for both local consumption and regional export, aiming to reduce dependence on foreign refined products and generate new streams of government revenue.

“Uganda will no longer be an exporter of raw resources alone,” Museveni stated during the signing ceremony. “We shall add value right here, create jobs, and build a resilient energy economy for generations to come.”

Yet, the ambitious refinery project is raising eyebrows among proponents of the 1,443-kilometre EACOP, a joint venture led by France’s TotalEnergies and China’s CNOOC, intended to transport Uganda’s crude oil to international markets via the Tanzanian port of Tanga. With a projected cost of US$5 billion, the pipeline has already faced intense opposition from environmental groups and financing setbacks from international lenders, some of whom have withdrawn support citing ESG concerns.

Energy analysts now question whether both mega-projects – the refinery and the pipeline – can be simultaneously viable, or if the refinery will eventually divert significant volumes of crude that were originally slated for export via the pipeline.

“The economics of scale for a refinery of this magnitude are only favourable if the government commits a sizeable portion of the national crude output,” said Moses Biryabarema, an energy policy expert based in Kampala. “That could undercut the throughput projections of EACOP and jeopardize its long-term profitability.”

Regional dynamics also come into play. The East African Community (EAC) had endorsed the pipeline as a critical piece of shared infrastructure meant to boost connectivity and integration across member states. The refinery-first approach could alter those assumptions and rekindle tensions between Kampala and its regional partners, particularly Tanzania.

Nonetheless, the Ugandan government maintains that both projects can co-exist under a dual-track strategy—balancing domestic value-addition with export ambitions. Officials say the refinery will not absorb all production and that EACOP remains essential for broader market access.

Construction of the refinery is expected to commence in early 2026, with operations projected to begin by 2028. The deal includes provisions for petrochemical facilities, a 211-kilometre pipeline connecting to the main grid, and the development of ancillary infrastructure in the Hoima region.

While Museveni’s bold vision may redefine Uganda’s place in Africa’s energy map, the success of his strategy will depend on balancing competing interests, regional geopolitics, and the unpredictable volatility of global oil markets.