Kenya is gearing up to extend its government-to-government oil import agreement, potentially into next year, amid the backdrop of a stable shilling against the US dollar.
This move aims to solidify partnerships with countries like Rwanda to prevent Tanzania from capturing the landlocked nation’s market, particularly after Uganda opted for self-importation of refined products.
The Energy and Petroleum Regulatory Authority (EPRA) revealed plans to onboard more Oil Marketing Companies (OMCs) to diversify and de-risk the transaction as the current contract nears its expiration.
EPRA’s director of petroleum and gas, Edward Kinyua, emphasized the ongoing expansion of the importing companies, signaling a proactive approach to safeguarding the nation’s fuel supply.
Amid considerations for extension, EPRA suggested a continuation of the deal with Gulf-based oil giants, including Saudi Aramco, Abu Dhabi Oil Company (ADNOC), and Emirates National Oil Company (Enoc). This strategic move, orchestrated by the National Treasury, aims to preserve forex reserves, crucially utilized for debt repayment.
This potential extension would mark the second time the agreement has been prolonged, following a similar decision in September 2023, which extended the deal to its current endpoint later this year.
EPRA Director General Daniel Kiptoo emphasized the importance of a gradual exit strategy, highlighting the complexity of abruptly terminating such transactions.
The current contract’s last Letter of Credit is slated for settlement in June next year.
Earlier this year, One Petroleum Ltd and Asharami Synergy joined Galana Oil, Gulf Energy, and Oryx Energy, further enriching the roster of OMCs involved in the importation agreement, underscoring Kenya’s commitment to ensuring a diverse and reliable fuel supply chain.
