Construction has begun on a $US23 billion port project and oil refinery in the Lamu region of south-eastern Kenya near the border with Somalia.
An oil pipeline, railway and motorway will also be built linking Lamu to South Sudan and Ethiopia.
The BBC reports South Sudan plans to use Lamu as its main oil export outlet.
To be known as Lamu Port South Sudan Ethiopia Transport Corridor, it is expected to be completed within four years.
The cost is being borne by Kenya, South Sudan and Ethiopia.