Oil & Gas

French oil major, RUBiS Energy Kenya has launched into the Kenyan petroleum and oil market by acquiring of KenolKobil Plc and Gulf Energy Holdings Ltd.

RUBiS Energy Kenya attains over 21 percent and a network of more than 230 service stations.

Mr. Jean-Christian Bergeron, the Group Managing Director of RUBiS Energy Kenya, says RUBiS decision was based on the region’s growth potential.

 “In addition to the acquisition of KenolKobil Plc and Gulf Energy Holdings Ltd, we will continue to invest heavily in the market through modernization of our existing retail outlets into state-of-the-art service stations. Our network of over 230 service stations is strategically and widely located across the country, thus playing a key role in delivering quality products and services to all Kenyan customers in a safe environment. We are launching an unparalleled shopping experience through our convenience store brand, RUBiS Express, by providing world-class convenience to motorists on the go, saving them time and money. We also provide a fuel card system that gives motorists total control of their fuel-related expenses through our RUBiS Card, offering convenience and efficiency when making payments at our retail outlets,” said Mr. Bergeron.

“Furthermore, we are significantly investing in the development and promotion of LPG, which is a clean and affordable energy source that will support the government’s ambition for an improved quality of life for all Kenyans. We also market an extensive range of high-quality lubricants under the K-Lube and Castrol brands and our products, imported or locally blended, meet the highest specifications demanded by most automotive and equipment manufacturers” added Mr. Bergeron.

RUBiS Energy Kenya is the largest supplier of aviation into-plane refueling services for regional and international commercial and cargo carriers, and is committed to delivering quality products and services to other business sectors in areas such as industry, agriculture, aviation and road infrastructure development.

The global energy player is also looking at leveraging its integrated distribution chain to increase market share in the region. RUBiS Energy Kenya plays an active role in corporate social responsibility activities themed around education, health, safety and environment. The oil marketer has most recently supported initiatives in response to the COVID-19 pandemic by installing sanitation facilities in various locations around Nairobi and providing fuel for ambulances and generators at Mbagathi Hospital.

The Government has committed to increase strategic fuel reserves to 100,000 cubic metres by the end of next year after the Auditor General’s report exposed delays in expanding the facilities.

Rwanda has, for long, planned to expand its fuel storage facilities in order to avoid any shortage like the one that was experienced in 2008 during Kenya’s post-election violence.

However, the plan, contained in the Downstream Petroleum Policy of 2012, has faced various challenges, which occasioned delays.

Under the policy, the Government was meant to construct fuel reserves that can stock at least 150, 000 cubic metres, sufficient enough to sustain the country for at least four months without imports.

Given that it costs $1,000 to construct one cubic metre of fuel reserve, to increase the storage to 100,000 cubic metres requires a combined $100 million in public and private sector investments.

The Auditor General’s Report for the 2017/2018 fiscal year said that by the time of the audit, 4,200 cubic metres of fuel storage were in place.

However, during an interview, Robert Opirah, the Director-General for Trade and Investment at the Ministry of Trade and Industry, said that the country has since increased the capacity 78,000 cubic metres.

Among these are 49,000 cubic metres that belong to private investors and 29,000 cubic metres for the Government.

Given that Rwanda’s monthly fuel consumption is 30,000 cubic metres, the current reserves can cater for the country’s demand for only two and a half months.

Opirah said that construction works for new strategic fuel reserves are underway.

He added that the delays in implementing the 2012 petroleum policy were, among other things, challenged funding shortfalls.

“The policy could not be successfully be implemented because we did not have enough resources to build fuel reserves in line with the plan,” he said.

The petroleum policy is being revised in order to align it with the National Strategic Transformation (NST1). It awaits cabinet approval.

“The adjustments being made on the 2012 policy are more about reexamining standards of fuel and petrol stations, as well as legal and regulatory framework than infrastructure-led transformations,” he said.

By the time the policy was designed, the region was grappling with rising cases of piracy in the Indian Ocean, which led to a sharp rise in fuel prices.

“Some ships carrying fuel would rather travel long distances in the water looking for safe ways to avoid being pirated or pay maritime security to accompany them to the ports to their destinations of Mombasa or Dar es Salaam and that would affect fuel price on the market not only in Rwanda but in the entire region,” Opirah said.

By the time the policy implementation started in 2013, he explained, piracy had eased while there was also an upgrade on fuel reserves at both the ports of Dar es Salaam and Mombasa.

This increased fuel storage capacity and increased the prospects of sustained supply to regional landlocked countries.

With a positive outlook, Rwanda cut back on its ambitious fuel reserve project from 150,000 cubic metres 60,000 cubic metres due to fear of stocking quantities that may not be used.

“We no longer had a reason to invest a lot of money in building new fuel reserves because we at least had confidence that fuel shortage wouldn’t happen in neighbouring countries,” he explained.

Rwanda has fuel reserves in Bigogwe in Nyabihu District, Rwabuye in Huye District and Gatsata, Kanombe and Rusatira in Kigali while others are being built in Rusororo.

The country imports between 400,000 and 600,000 cubic metres of fuel every year, of which 20 per cent is re-exported to neighbouring countries, especially DR Congo, hence increasing the need for more reserves.

Kenya’s dream to join the league of petroleum exporting countries became a reality today as the first consignment of Kenyan crude oil left the Port of Mombasa on Monday.

The consignment of 200,000 barrels of low sulphur crude from Kenya’s oil fields in Turkana County, bought by United Kingdom based ChemChina, is worth Shs1.2 billion, a price much higher than what was initially projected.

Kenya is using this initial export to test the global market before it embarks on large scale commercial production of its oil.

The inaugural shipment of the crude oil makes Kenya the first Eastern Africa country to become an oil exporting nation.

The Celsius Riga, the ship carrying the Kenyan crude oil left the Mombasa Port for Malaysia shortly after midday, after it was flagged off by President Uhuru Kenyatta.

President Kenyatta said it was a milestone moment for Kenya as it becomes the first country in the region to become an oil exporter.

“I am proud to say Kenya’s grand march to oil and gas production and export has begun. The flagging-off of this maiden consignment represents a new dawn for Kenya; and the beginning of an era of greater prosperity for all Kenyans,” President Kenyatta said.

The President said the government is committed to achieve sustainable development through prudent use of the country’s resources.

“We will ensure that Kenya’s natural resources are utilized in a manner that yields maximum dividends today but without compromising the interests of future generations,” said the President.

Kenya’s Early Oil Pilot Scheme (EOPS) commenced in June 2018 marking the beginning of the journey towards full development of Kenya’s oil and gas resources.

President Kenyatta said EOPS has shown global markets that Kenya possesses the know-how and infrastructure required to facilitate full production of commercial quantities of its oil resource.

The President said that the next phase following the success of the pilot project will include full field development that will be characterized by production and pipeline transportation of crude from Lokichar to the new Port of Lamu.

President Kenyatta said the oil project has already brought benefits for the people of Turkana County, with the local communities directly benefiting from employment opportunities in production and logistics, in addition to provision of ancillary and support services.

“As we proceed to full field development, we will ensure that local communities are major beneficiaries of these resources,” President Kenyatta assured.

He said the government has put in place measures to ensure that the fruits of prosperity are shared with devolved units in an equitable and sustainable manner.

“We have also committed, as a government, to upgrade the Leseru to Lokichar Road; and the modification works at Kenya Petroleum Refinery Limited, to support the Early Oil Pilot Scheme,” said the President at the ceremony held at the Kipevu Oil Terminal inside the Port of Mombasa.

At the same event, President Kenyatta congratulated 136 Kenyans who have gained employment as seafarers on several ships owned by the Mediterranean Shipping Company (MSC).

The 136 seafarers are part of a contingent of 275 Kenyans who have so far gained employment as part of ongoing government efforts to position the blue economy sector as a key economic driver.

The President revealed that the seafarers have got lucrative jobs and asked them to use their incomes wisely for the benefit of their families and their country.

“We can happily disclose that the lowest salary these seafarers will earn is a minimum of Kenya Shillings 85,000 per month,” said the President.

In addition, each seafarer will receive one return ticket for annual leave, meals and accommodation, health insurance as well as access to free world class in-house training to enable them to progress their careers.

The first batch of seafarers will serve in various fields including ship rating, cruise staff, cabin stewards, cooks, secretaries, shop attendants and animators.

“I also urge you to emulate the seafarers who have been recruited before you. Because of their exemplary performance, the Mediterranean Shipping Company has steadily increased the hiring of young Kenyans to work in their ships. Serve with professionalism, dignity and integrity and build Kenya’s reputation at sea,” the President told the newly recruited seafarers.

The seafarers were introduced by Chief of Defence Forces General Samson Mwathethe who heads a government taskforce on the blue economy.

Petroleum CS John Munyes said the Government plans to construct a pipeline between Turkana and Lamu to transport the crude oil.

By Sharon Chepng’etich and agencies

South Sudan has enhanced its oil production by 6,000 barrels, bringing the total oil output to over 180,000 barrels per day, the Petroleum Minister, Awow Daniel Chuang said on Wednesday.

The increase, he said, was realized after the country resumed oil production at Block 1&2 in Manga oilfield, which was closed six years ago due to insecurity in the northern parts of the country.

He said Manga oilfields re-opening would boost the country’s efforts to reach the 200,000 barrels per day of oil by the end of this year.

“This is significant in our production and if we are to translate this figure into money, it would be a significant improvement in our revenue,” said Chuang.

Oil-rich South Sudan is struggling to increase oil production, months after the signing of the revitalized peace accord in September 2018.

In June, the South Sudanese government announced the suspension of all pre-sale oil contracts in a move aimed at attracting competitors with better prices.

About 90 per cent of South Sudan government’s revenue comes from oil resources, while the rest is collected in the form of customs taxes, market taxes, road taxes, income tax and permits, among others.

On 21^st August 2018, a 27-year-old man and his two-year-old son died while sleeping in their house in Mukuru slums, Nairobi, following an explosion from a gas cylinder. Months later, in 2019, two separate incidents of gas explosions occurred – one in Mlolongo, Machakos County, where one person died and two others were injured and another at Kenya Bus Station, Nairobi, where three people got burnt beyond recognition when fire razed a lodging they were staying in.

But how could these have happened? According to energy regulator, Energy Petroleum Regulatory Authority (EPRA), irregular marketing and supply of Liquefied Petroleum Gas could be connected to some of these explosions, among other reasons.

This is why the Authority came up with a set of standards to regulate production and supply of the product to ensure Kenyans get access to affordable and clean Liquefied Petroleum Gas (LPG).

Speaking during the launch of the new regulations early June, Pavel Oimeke, the Director General for EPRA said the new rules would only allow accredited and authorized firms conduct business on gas production and Supply. And they’ll ban oil marketers from accepting gas cylinders from rival brands during refilling.

The regulations, unveiled by the Energy ministry, are meant to restore safety by minimizing opportunities for illegal refilling, rebranding and counterfeiting of gas cylinders. This would mean that Kenyans will no longer exchange their cylinders for different brands at their local dealerships.

Oimeke said the rules target the counterfeit market and create safety guarantees to draw consumers from using firewood, which increases chances of attack by respiratory diseases- ranked among Kenya’s biggest killer diseases.

With the new laws, it will no longer be mandatory for LPG retailers to swap any brand of cylinders.

“The mandatory interchange of LPG cylinders has seen brands lose track of 90 per cent of the cylinders they had invested in, stalling investment in further cylinders, and seeing legal checks set aside as nameless re-fillers resold cylinders, but could not be made accountable for safety breaches.” Oimeke Said.

LPG brands are also on check as the law places additional responsibility on them in terms of guaranteeing the safety of every cylinder.

“The brands, which will only swap their cylinders for new ones through their own branded retail points, must also add safety instructions onto each cylinder, including guides on what to do if consumers smell a gas leak,” Oimeke said.

These changes are part of a government drive to position LPG as Kenya’s primary cooking fuel to end the health and environmental problems that result from cooking using firewood and charcoal.

“Elsewhere in the world, LPG dominates in rural areas as a clean and safe fuel. Moving to regulations that will see the end of illegal cylinder refilling in Kenya will open the way for a projected seven-fold increase in LPG usage.” Olagoke Aluko, Chairman of the Petroleum Institute of East Africa (PIEA) said during the event.

PIEA, which represents the country’s oil and gas industry, is now working with the government and regulators to achieve a widespread switchover to LPG, at a time when more than 70 per cent of Kenyans are still using firewood and charcoal for cooking.

Air pollution

PIEA has vowed to push for the use of LPG in a bid to promote a Green economy, saying it will no longer accommodate gas cylinders that are not properly checked between refills and are not fully labelled for safety and traceability.

“The pollution that dirty cooking fuels are creating in the homes is killing tens of thousands of Kenyans a year,” said Aluko, adding: “Estimates suggest some 21,650 Kenyans die every year from air pollution, and 40 percent of childhood deaths are being caused by respiratory diseases triggered by indoor cooking pollution.”

The country’s dependency on firewood and charcoal, which has remained larger than in other African countries as a result of challenges in the Kenyan LPG market, has caused severe destruction of forests.

Illegal logging has damaged main water catchment areas and seen the country suffer a shortfall in its wood supply each year.

According to Aluko, the regulations would help investors have a free but monitored circulation and benefit from the safety of not just the consumer but the environment as well.

“Our troubles in this regard date back to the introduction of domestic LPG cylinder inter-change. It is the law in Kenya that all LPG cylinders can be interchanged at the point of purchase regardless of the brand, this is enabled by the requirement for all domestic cylinders to have a universal valve of the same LPG regulator fitting across different brands, so that consumers only need a single fitting to connect any brand of LPG cylinder.”

“The rationale for introducing mandatory interchangeability and common valve on every cylinder was an excellent one. It allows any citizen to conveniently buy LPG of any brand at the closest point of sale.”

PIEA has established the circulation flow of illegal gas in various markets and the dangers it pauses to its consumers. And says there’s a gap which prompts illegal marketers to supply fake gas to the innocent buyers.

“This is one of those matters that looks simple on the front end, but more problematic behind the scenes, causing two very distinct problems. The first is that though there is an LPG Cylinder Exchange Pool that manages the interchangeability process, the vast majority of branded cylinders are never returned to their original branded owners.” Aluko says.

“Instead, the empty cylinder moves into a parallel market, is illegally refilled and returned back to retailers for resale. Of all the cylinders bought by majority of the licenced LPG marketers, 90 per cent were never returned, staying out there through endless rounds of illegal refills and resales.”

Cause for most explosions

This set up a severe safety problem, as the branded cylinder owners are obliged to check cylinders with every refill and to periodically test their valves and overall safety. With cylinders moving around without ever returning to their brand owners, many go for years on end without being checked for safety.

Thus, cylinders begin to get damaged without spotting or even checked as they are often illegally refilled. They then begin to leak, explode and ultimately cause untold harm to people’s homes and lives.

“The second problem that arises on interchanging cylinders is the debt that arose from this mandatory exchange of cylinders amongst brand owners. This is because a brand owner would on many occasions end up with excess competitor empty cylinders compared to the number exchanged between the two brands, forcing the brand owner with less number of cylinders to pay a refundable cylinder deposit to cover the physical cylinder deficit,” he says.

“With time this refundable cylinder deposit owed amongst the fifty (50) LPG exchange pool members increases astronomically leading to collapse of two brands that didn’t honour the refunds and an unpaid debt of approximately Ksh1billion in cash and assets.”

As a solution to all these problems, the new regulations now end mandatory interchangeability. Consumers may only return their cylinders to retailers acting for the brand market on the cylinder.

The brand can voluntarily form mutual partnerships with other brands to interchange its cylinders at the point of sale, following approval by the Competition Authority and submission of this agreement to the Energy and Petroleum Regulatory Authority (EPRA)

Henceforth, every brand will have a relationship with distributors and retailers that are selling or collecting its cylinders.

“As LPG cylinders come home to their brand they will be checked as safe with every refill, and the new regulations affirm that the brand remains the owner of all cylinders, must keep track of every one of them, and is absolutely responsible for the cylinder’s safety at all times.” Aluko says.

Thus, consumers have to get a safety guarantee from the brand, restored as a straight line without questions or doubts over responsibility and the brand marked on the cylinder is responsible for its safety.

The new rules mean marketers must also put extra safety information on each cylinder.

Hon. Dr Medard Kalemani, Tanzania’s Minister of Energy, has confirmed his attendance at the Tanzania Oil and Gas Congress this October where he will give updates on the recently announced plans for a syndicate of oil companies to commence construction of the $30bn LNG project in 2022.

In March, the government stated that it planned to complete negotiations with a group of international oil companies in September to develop the project. Led by Norwegian energy firm, and Platinum Sponsor of the Congress, Equinor, the group also consists of Royal Dutch Shell, ExxonMobil, Ophir Energy and Pavilion Energy.

These international companies will work closely on the project, alongside the state-run Tanzania Petroleum Development Corporation (TPDC).

“Those keen to learn more about the movements in Tanzania’s gas market would find it beneficial to attend the Tanzania Oil & Gas Congress”

In a budget presentation to parliament, the Honourable Minister stated that the project aims conclude in 2028 and will have capacity to produce 10 million tonnes per annum of LNG.

Currently, each individual investor of the project is holding separate talks with the government negotiation team. These talks are expected to be finalized within seven months.

According to the Bank of Tanzania, work on the project will increase annual economic growth, which currently stands at around 7 per cent, by another two percentage points.

Those keen to learn more about the movements in Tanzania’s gas market would find it beneficial to attend the Tanzania Oil & Gas Congress, which brings together key players in Tanzania’s oil and gas value chain.

Delegates at the high-profile event, which takes place in Dar es Salaam on 2 – 3 October 2019, will be the first to hear about Tanzania’s exciting investment opportunities directly from the Minister of Energy, Government representatives, regulators and industry leaders. 

South Sudan’s Ministry of Petroleum is actively seeking to engage oil and gas companies focused on exploration and will announce details of its 2020 licensing round at Africa Oil & Power (AfricaOilandPower.com) conferences in Cape Town and Juba.

The South Sudan Oil & Power 2019 event, to be held on October 29-30, has confirmed key partnerships with oil companies, banks and various South Sudanese ministries; The resumption of oil production has provided new impetus for bringing new oilfield technology to the country.

South Sudan’s Minister of Petroleum Hon. Awow Daniel Chuang will announce South Sudan’s 2020 oil and gas licensing round at two strategic conferences this October: Africa Oil & Power 2019 in Cape Town, South Africa, on October 9-11 and South Sudan Oil & Power (SSOP) 2019 in Juba on October 29-30. The Minister will also announce a tender for an environmental audit for the country’s producing oilfields at the SSOP conference.

The Ministry of Petroleum is now actively seeking exploration, seismic and geophysical companies to gather and present exploration data at the event and invites Canadian, U.S. and European companies to SSOP 2019 to gain a better understanding of South Sudan’s oil and gas sector.

“This is an incredible milestone in South Sudan’s plans to double oil production by 2020. The country has a massive onshore reserve base and vast unexplored areas that make a licensing round very exciting. We are excited to host the announcement of the 2020 oil and gas licensing round at Africa Oil & Power 2019 and South Sudan Oil & Power 2019,” said Guillaume Doane, CEO of Africa Oil & Power.

Resumption of production at several key oilfields in South Sudan, a landmark peace deal celebrated in October 2018 and cooperation with neighboring Sudan have significantly improved investment conditions for the energy sector in the country.

There has also been an uptick in foreign investment through oil and gas exploration companies including Oranto Petroleum, which signed a six-year exploration and production sharing agreement (EPSA) for Block B3 in 2017 and South Africa’s Strategic Fuel Fund, which in March this year signed an EPSA for Block B2.

South Sudan’s Ministry of Petroleum has reiterated plans to return to pre-war production levels of 350,000 barrels per day (bpd) by 2020, and will do so by increasing production at the recently rehabilitated oilfields of Greater Pioneer Operating Company and resuming production at fields operated by Sudd Petroleum Operating Company.

“This is an incredible milestone in South Sudan’s plans to double oil production by 2020”

The Ministry has stressed a particular need for geophysical and seismic companies to assess South Sudan’s vast oil and gas resources, which are underexplored by estimations of up to 70 percent.

The resumption of oil production has provided new impetus for bringing new oilfield technology to the country, especially new environmental technologies.

Hosted by Africa Oil & Power for the third year running, SSOP 2019 has confirmed partnerships with South Sudan’s Ministries of Petroleum, Energy and Dams, and Finance and Economic Planning; as well as banks operating in the country, national oil company Nilepet, major investors Petronas and CNPC, and joint operating oil companies Dar Petroleum Operating Company, Greater Pioneer Operating Company, Sudd Petroleum Operating Company.

South Sudan Oil & Power will host panels on finance, oilfield technology and community development. Under the theme Focus on Finance, SSOP 2019 is held under the auspices of H.E. Gen. Salva Kiir Mayardit, President of the Republic of South Sudan, and kicks off with a grand inauguration and gala dinner sponsored by Trinity Energy on October 28. Registration for the conference is open and more information can be found at www.SSOP2019.com

Africa Oil & Power 2019 gathers African energy investors and leaders in Cape Town for the year’s biggest energy event, with the theme #MakeEnergyWork. This year, AOP 2019 is opened by President of Senegal H.E. Macky Sall, and will host licensing round announcements for Senegal and South Sudan, as well as dedicated programs for Angola, Lesotho, South Africa, and more. Registration and information can be found at www.AOP2019.com