Kenya to Start Importing Fuel from Saudi Arabia

The national oil corporation of Kenya (NOCK) will start buying Saudi Arabia’s fuel in August at lower prices than the global rates. This deal is a relief to consumers who are already struggling with high fuel costs, as pump prices are likely to come down.

In the agreement, Saudi Arabia’s State-owned Saudi Aramco will consign 30 percent of its monthly petroleum requirements to Nork from August for trials. The full shipping is expected to commence in October. The duration of the contract is, however, yet to be confirmed.

“We already signed the MoU, and the next phase is negotiating the contract terms. We are waiting on them as from last Sunday,” Nock Chief Executive Officer Leparan ole Morintat said.

Saudi Aramco will finance the shipments, and Nock will pay within 60 and 90days, with the imports expected to cushion Kenya from fuel shortages witnessed in the last couple of months due to global disruptions.

The high fuel cost has remained a burden in Kenya since March, when the country was hit by shortage amid the Russia-Ukraine war, which triggered supply hitches.

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Currently, a litre of super petrol is retailing at 159.12 shillings while diesel is selling at 140 shillings in Nairobi. Kerosene is at the same time going for 127.94 shillings.

The price is even more likely to surge if the national Treasury removes the subsidy, covering 25.56 shillings for super petrol, 48.19 shillings for diesel, and 42.43 shillings for kerosene. This will see the cost of the aforementioned commodities hit 184.68 shillings per liter, 188.19 shillings, and 170 shillings, respectively.

Kenya depends on imported refined petroleum products, mainly from the Middle East. In 2021 the country imported 6.149 billion litres of refined petroleum worth US$3.48 billion, mainly sourced from the United Arab Emirates, Saudi Arabia, India, Netherlands and Kuwait.

According to the Petroleum Institute of East Africa, Kenya consumes an average of 213 million liters of diesel, 150 million liters of petrol, and 39 million liters of kerosene.

Vivo Energy, Total Kenya and KenolKobil lead Kenya’s fuel distribution industry. Vivo Energy Kenya takes the lead at 26.52 percent of the local petroleum market, followed by Total Energies at 17.7 percent and Rubis Energy (10.73 percent).

On the other hand, the National Oil Corporation of Kenya has 2.2 percent of the market.