Tanzania and Uganda have signed a preliminary agreement with global commodities trader Vitol to develop a regional energy hub at Tanzania’s Port of Tanga, strengthening plans for an alternative petroleum corridor as Uganda approaches first crude exports.
The Tanzania Petroleum Development Corporation, Uganda National Oil Company and Vitol Bahrain signed a non-binding agreement on August 6 to explore development of the Tanga Regional Energy Hub.
The project remains at an early stage. The parties have not disclosed a final investment plan, financing structure or construction timetable, while the precise infrastructure to be developed has yet to be determined.
Tanzania has said potential investment associated with developing Tanga into a broader energy centre could eventually exceed $20bn, although the figure represents prospective infrastructure spending rather than committed capital from Vitol or the two governments.
Tanga’s Growing Energy Role
Tanga is already becoming an important node in East Africa’s petroleum infrastructure.
The port area is the Indian Ocean destination of the 1,443-km East African Crude Oil Pipeline (EACOP), which will carry oil from Uganda’s Lake Albert fields to the Chongoleani Peninsula near Tanga. The pipeline is designed for peak throughput of about 246,000 barrels a day.
EACOP said in June that the project had reached 88 per cent completion, bringing Uganda closer to its first crude exports.
A larger energy hub could add storage and refined-product logistics to Tanga’s emerging role as Uganda’s crude-export gateway, strengthening Tanzania’s ability to serve inland markets including Uganda and Rwanda.
Uganda Diversifies Supply Routes
Uganda remains heavily dependent on imported petroleum products, with most supplies entering through Kenya’s Port of Mombasa before moving inland through the Kenya Pipeline Company network.
Developing Tanga as an additional gateway would give Kampala greater flexibility and reduce its reliance on a single supply corridor.
The strategy does not necessarily signal a shift away from Kenya. Uganda has simultaneously strengthened its position in the Kenyan system through UNOC’s acquisition of a 20.15 per cent stake in Kenya Pipeline Company.
The emerging approach is therefore one of route diversification rather than substitution: maintaining the established Mombasa corridor while developing Tanzania as an alternative.
Vitol already has a substantial commercial relationship with Uganda through petroleum supply and financing arrangements with UNOC. The companies have agreed financing of up to $2bn to support strategic Ugandan petroleum infrastructure and investments.
Vitol’s involvement would link its existing Ugandan fuel-supply and financing business with a second regional petroleum corridor through Tanzania.
Regional Implications
The proposed hub comes as East Africa’s petroleum geography begins to change.
Mombasa remains the principal entry point for refined fuels moving towards Uganda and other inland markets, while EACOP creates a new crude-export axis from Uganda to Tanzania’s coast.
If developed, Tanga could increasingly support both sides of that trade: crude moving towards international markets and refined petroleum products moving inland.
That could strengthen competition between regional logistics corridors while giving governments and fuel suppliers greater flexibility over sourcing, storage and distribution.
The agreement remains preliminary, with the infrastructure scope, financing and binding commitments still to be determined. Alongside the approaching completion of EACOP, the agreement nevertheless strengthens Tanga’s prospects of becoming a second major petroleum gateway for landlocked East Africa.
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