The Foster Wheeler refinery study, the original recommendation for a regional refinery serving the needs of the EAC is nearly as old now as the median age of Uganda. The report when it was written was revolutionary. It gave form, 15 or so years ago, to Uganda’s ambition to refine crude from Hoima. The initial vision for a domestic refinery was political. It was founded on the idea of energy independence, and with it, strategic autonomy and the assertion of Ugandan and African sovereignty over minerals and oils. Uganda has since then, through presidential proclamation and formal policy, effectively declared a position of not exporting raw materials especially minerals.
The Foster-Wheeler study or report was commissioned by the Ministry of Energy and Minerals Development. Even at this time in Uganda’s oil story two camps existed. The one, in which the International Oil Companies or IOCs existed followed a time honoured tradition (that is the orthodoxy) that oil producing countries should be separate from oil refining countries.
This position was deeply suspicious to State House in Uganda. Leaders here adapted a practical (and at times cynical view) that foreign capital which was necessary for large infrastructure projects was also a source leverage by external companies over the state. In short IOCs were the avatar of the politics of foreign countries from where these companies originated. They believed too that, depending on how dependant on the oil economy a country became, the IOCs were an armed embassy of the countries investing in that sector capable of holding weak governments at ransom.
This logic of national self interest embedded in the extractive sector is now mainstream and on television.
US companies and the US government deciding what to do with Venezuela, the country with the worlds largest reserves ( after the latter forcefully abducted the president of Venezuela) is one dramatic example of this commingled interest. Latest headlines from the Gulf economies particularly Iran, whose oil sector is a major factor in the geopolitical tensions regarding its politics, are further examples if viewed through the lenses of who will control their oil resources.
In any event IOC camp in Uganda objected strenuously to refining oil in-country.
The other camp , which consisted of a Uganda’s crew of technical experts and their political support in the Presidency only saw one future; Uganda with a refining capacity at home as a primary goal and an export pipeline for crude for the rest.
The political calculations explain why, despite a promising start, Ugandan decision-makers were in no hurry to go to market sans a refinery. The Foster-Wheeler report provided the technical arguments to support the Ugandan position. The fact that in the earlier days speaking openly about Foster-Wheeler was treated as heresy ( counter reports were produced) showed its influence on the world view of Ugandan oil planners.
The Foster Wheeler report would remain hidden from view. Even today not many folks referred to it publicly. Many would now say that it is outdated and its calculations no longer hold. But Foster Wheeler is not simply a piece of history. Better insights have emerged on Ugandan crude, its quality and what it would take to refine it in Hoima. New refinery configurations now form part of the government plans as well as new investment efforts to get the refinery off the ground.
But it is the pipeline, especially the East African Crude Oil Pipeline, that exercises the imagination of the oil sector. Still on the fundamentals ( what served Uganda better, a pipeline or a refinery?) the Foster Wheeler report’s financial and engineering model recommended a refinery. That’s it. Not a pipeline. To that extent it stands alone in projecting a different vision for Uganda and East Africa’s petroleum future.
The report posited high returns from a refining investment ( a 33% post tax return, capital recovery in less than three years after production and a supply cost advantage over imports from the Middle East. Judged against a worst case scenario where East Africa has no guaranteed access to oil imports from the Middle East the report appears prescient in its core logic. On 2 March 2026 Iran’s Revolutionary Guard closed the Strait of Hormuz to commercial traffic ( P&I insurance was cancelled three days later. The major container companies Maersk, MSC, CMA CGM, Hapag-Lloyd suspended transits and the situation remains untenable. The Bab el-Mandeb, the southern exit through which all Middle East petroleum must pass to reach East Africa, has itself been under Houthi interdiction since December 2023. It has also come under pressure.
Daily headlines also suggest the war on Iran is not slowing down.
These gulf “chokepoints” essential to global oil commerce but to East Africa they are critical. Our region 100% reliant on oil from the Middle East. The region currently holds approximately 25 to 30 days of strategic petroleum stock against an IEA recommended minimum of 90 days. This posture has worked so far because supply disruptions happening today were not expected. Oil officials have told me the stock available to Uganda will hold until May partly due to a lucky cycle where (3) ships destined for Uganda had loaded and were enroute before the crisis accelerated.
As of today there is no operational refining capacity in the East African Community despite a total regional consumption of approximately 240,000 barrels per day and an annual import bill of approximately USD 10 to12 billion. It is perhaps futile now that events have taken over to gesture back to Foster Wheeler.
Maybe. But the reality too is that Uganda is on the verge of completing its readiness to extract oil by mid year. The Foster Wheeler report had recommended a smaller, faster, cheaper entry point for refining at a 20,000 barrel per-day thermal cracker at a cost of USD 1.17 billion. Had it been implemented it would have been operational by 2015. This scenario (possible today) can meet some of Uganda’s own needs (especially diesel) and additions to the refinery would then expand to cover more oil products and output for other clients like neighbouring countries.
Channeling Foster Wheeler, a refinery at Hoima, processing Albertine Graben crude could potentially supply diesel to Rwanda at $98 per tonne below what Kigali currently pays for imports. It could also supply Burundi, which even before the Gulf crisis was facing severe energy shortages, at $90 below parity, South Sudan at $102 below parity, and eastern Democratic Republic of Congo, a complex market for petroleum products at $123 below parity. These were projections based on 2010 figures. Adjusted for today’s conflict based scenarios, they are considerably more positive.
It is better now to speak of such a refinery with sentences like “ the refinery will” supply. A new investor ( from the Middle East) is set to complete initial preparations to build one even though this is also still years away. Unless of course, as argued in the previous article, the refinery is frog matched as an emergency project with the ghost of Foster Wheeler breathing hot on its back and implemented as a necessary and critical geostrategic asset for East Africa.
This would also make sense if it were structured to give EAC member states equity stakes proportional to their supply benefit and as a permanent complement to market solutions to the regions petroleum needs when the tensions in the Middle East have cooled. Why waste a crisis like the current one? Supply solutions moving forward will require continuous diversification as we have argued before to other sources such as West Africa, Russia and perhaps India.
A similar argument ( on domestic refining) can be made for Angolan crude which should be refined or gas in Tanzania and Mozambique. African resources and energy can solve African problems and such growth is more sustainable in the long run. Besides there shall never be a strategic shift in the direction of common security in Africa until it can harness these resources for internal stability.
As history has taught; all growth that is based on external resources and markets has historically been the source ( and the reason) for conflict and Africa knows this all too well.
