Kenya seeks to resume fuel trade in Dar with its new reserve in Mombasa

By ANTHONY KITIMO

Kenya is banking on the new Kipevu oil terminal, worth $385 million, to snatch oil activity from the port of Dar es Salaam, which supplies the Great Lakes region.

Tanzania has reversed the situation on the port of Mombasa after persistent allegations of tampering with petroleum products on the Northern Corridor. Then, the closure of the border between Uganda and Rwanda for three years and lower tariffs made the two countries more dependent on the Tanzanian port.

Now, with the new Kipevu facility, Nairobi plans to create a petroleum products hub for the region, hoping to regain its lost business. The government has also started converting the Changamwe depot of Kenya Petroleum Refineries Ltd (KPRL) in Mombasa, a few kilometers from Kipevu, into a fuel and liquefied petroleum gas storage facility.

Kenya’s Principal Petroleum Secretary Andrew Kamau said East Africa that the procedures for the Kenya Pipeline Company (KPC) to take over the KPRL are about to be concluded to make the facility a hub for larger vessels.

Mr. Kamau said the Kipevu Oil Terminal (KOT) will serve as an import and export facility.

“We will use this new facility because it has intake and offload mechanisms, where larger ships can offload fuel, store it in the KPRL depot, and then reinject it into smaller ships, which can supply the islands of Indian Ocean such as Zanzibar, Seychelles, Mauritius and other countries that do not have such facilities,” Mr. Kamau said.

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“The construction of KOT and its outlying facilities is aimed at supplying Kenya with cheap gas and other petroleum products and ensuring a steady supply of these products to East Africa and other islands in the ocean. Indian,” he added.

Nairobi is trying to bring back Uganda, the main user of the port of Mombasa for transit cargo, to start importing fuel from Kenya via the northern corridor to Kisumu and then transfer it via Lake Victoria using the new jetty at $170 million fuel in Kisumu.

Uganda imports at least 185 million liters of petroleum products per month, mainly transported through the port of Kisumu and the depot of Eldoret. Kenya transports around 900 million liters of petroleum products per month and relies on Tanzania’s poor fuel transport infrastructure to support Ugandan oil transshipment activity.

Uganda last year said it was exploring options to reduce its dependence on Kenya for oil imports by increasing shipments through Tanzania, a move that rocked port managers in Mombasa and the government mandarins.

Currently, Kampala accounts for three-quarters of cargo transiting the port of Mombasa, and any drop in shipments could further hurt the facility, which is trying to avoid growing competition from Tanzania’s Indian Ocean ports of Dar and Tanga.

In July, the Uganda Railways Corporation (URC) began a trial delivery of 500,000 liters of petroleum products from Mwanza, after a 16-year hiatus, across Lake Victoria. The cargo from Dar port had been transported by train to Mwanza port.

It takes four days to transport goods from the port of Dar es Salaam by road and rail to Port Bell in Uganda.

URC acting chief executive Stephen Wakasenza said while Kampala was comfortable with Mombasa, he was looking for an alternative route “for strategic reasons”.

“We are targeting oil because it is a product used daily. Our aim is to bring 10-20 million liters to both routes per month and increase the capacity to 40 million litres,” Wakasenza said, adding that they will rely on a Kenyan vessel to supply about four to six million liters per month.

Kenya now claims that with storage facilities in Mombasa and Nairobi connected to the old meter gauge rail network, it will dedicate freight trains to transporting petroleum products, especially now that the KOT can allow at least four ships to dock at the same time.

“We understand the challenge ahead regarding storage, this is where a freight train comes in to evacuate these products to avoid unloading delays,” PS Kamau said.

Mr. Kamau conceded that the Eldoret-Kampala-Kigali Refined Petroleum Products Pipeline originally planned, one of the key projects that Uganda, Kenya and Rwanda have agreed to jointly implement as part of the development projects. Integration of the northern corridor, called the Coalition of the Willing, had been “abandoned, unless further discussions are initiated”, hence the new plan.

The pipeline was expected to cost $1.5 billion, with the 350 km Eldoret-Kampala section costing $400 million and the 434 km Kampala-Kigali belt costing $1.1 billion.

The project would include the construction of the mainline pumps, intermediate pumping stations and road or rail loading facilities for tankers. The original design requirement would also have allowed for a two-way flow with the installation of pump stations to deliver products from the planned Hoima refinery in Uganda via Kampala to Kenya, with another option to feed the Kampala-Kigali pipeline.

But now Kenya is seeking to double the handling capacity of petroleum products in transit from the current 35,000 monthly tons and to entice Uganda, Rwanda, Burundi and the Democratic Republic of Congo to consider Mombasa as their main source. of oil, because it will be cheaper than using the central corridor of Dar.

According to the Kenya Ports Authority (KPA), the former oil facility recorded a total liquid bulk throughput of 8.63 million tonnes in 2021, compared to 8.37 million tonnes in 2020.

KPA Acting Managing Director John Mwangemi said faster loading should translate into lower LPG prices as oil marketing companies are expected to pass on the benefits of reduced demurrage charges to consumers.

The new Kipevu oil terminal, built by China Communications Construction Company, will have undersea and onshore pipelines connecting it to storage facilities, and the capacity to handle five different oil products: crude oil, heavy fuel oil and three types of white oil . products (DPK-Aviation Fuel, AGO-Diesel and PMS-Gasoline).

The facility is built directly opposite the second container terminal at the Port of Mombasa with a vessel handling capacity of 200,000 deadweight tonnage (DWT) and a dedicated LPG line.

The new LPG terminal will have two LPG unloading lines where, according to the government plan, KPC will be entitled to one line while private companies will be allocated the second line.

The second line will play a key role in ending the long-standing gas supply monopoly, as it will allow new entrants into the business.

Kenya’s National Environment Management Authority (Nema) said at least 20 companies had expressed interest in the second line before construction, but only seven submitted their bids for approval.

KPC currently receives imported LPG from vessels moored at Shimanzi Oil Terminal and puts it in its tanks – T610 and T611 located at its Changamwe facility. The product is then evacuated to local terminals via interconnected pipelines for truck loading and bottling respectively.

Already, the pipeline agency is setting up a dedicated LPG storage facility with an initial capacity of 25,000 tonnes, which will play a key role in reducing the cost of gas by 30% once the facility is operational. .