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Oil and Gas: Kenya oil product imports likely to hit record

By Jessica Jaganathan
Posted on Tuesday, 12 May 2015 06:10

Industrial expansion and a growing fleet of automobiles in a region that lacks refining capacity have stoked East African appetite for oil product imports, with relatively nearby refiners in India such as Reliance Industries well placed to ship cargoes.

Demand for petroleum fuels in Kenya and the region, especially for gasoil and gasoline, has been on the rise

Kenyan imports of diesel, jet fuel and gasoline are likely to hit nearly 600,000 tonnes in May, up around a third from the same month last year and nearly four-times larger than May, 2013, according to import data seen by Reuters.

Soaring demand from Kenya is helping support Asian gasoil margins at above $13 a barrel to Dubai crude, curbing the impact on prices of a supply glut in Asia as economic growth stutters in some key markets there.

And Kenya’s imports, which also include volumes for land-locked Uganda, South Sudan, Rwanda and Burundi, as well as parts of Tanzania, could rise more if plans are successful to solve infrastructure problems such as the limited capacity of a government-owned pipeline.

“Demand for petroleum fuels in Kenya and the region, especially for gasoil and gasoline, has been on the rise although infrastructure challenges, particularly the lack of capacity in its product receiving terminals, has curtailed supplies,” said a source familiar with the matter.

He declined to be identified as he was not authorised to speak with media.

Seven up

The May figures bring Kenya’s oil product imports so far in 2015 to 2.66 million tonnes, more than half record annual shipments of 4.6 million tonnes seen in 2014, the trade data showed.

If those levels are maintained over the rest of 2015, the country’s imports will have grown over seven-fold since 2000.

The data also showed that Reliance, via its subsidiary Gulf Africa Petroleum Corporation (Gapco), is expected to supply over 1 million tonnes of oil products to Kenya this year, up from 912,000 tonnes in 2014, and increasing its market share to nearly 40 percent.

A Reliance spokesman did not immediately respond to requests for comment.

Other major suppliers of fuel to Kenya include Total and Vivo Energy, a joint venture between Royal Dutch Shell. The government of East Africa’s biggest economy expects growth to rebound to 6.9 percent in 2015 after slowing to 5.3 percent last year.

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