Kenya Loses $200 Million in Oil Exports as Uganda Shifts to Dar Port
New data reveals that Kenya has sustained a significant blow, losing exports worth $200 million to Uganda, its largest regional market, since October 2023.
Experts warn that this loss is likely to exacerbate as the standoff over petroleum products imports escalates, putting major oil infrastructure at risk of underutilization.
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This stems from Uganda's announcement that it would pivot to Tanzania for oil imports, following a deadlock in the effort to register its national oil marketer, Uganda National Oil Company (UNOC), in Kenya to enable imports via the Mombasa port.
Ugandan Energy Minister of Energy Ruth Nankabirwa conveyed concerns about Kenya's persistent hindrance of the UNOC deal. She underscored that Uganda's fuel supply stability is at risk due to Kenya's continuous frustration of the UNOC deal, leading Uganda to explore alternative solutions.
In her statements, Ms. Nankabirwa highlighted Uganda's intent to engage in negotiations with the Tanzanian government to potentially waive some taxes, easing the logistics involved in the alternative route for oil imports.
The decision by Uganda threatens Kenya's investments, including the $385 million Kipevu Oil Terminal 2 (KOT2) in Mombasa, operational since last year, and the $170 million fuel jetty in Kisumu. These investments were put in place to enhance the handling of petroleum products, targeting to double transit capacity to Uganda, Rwanda, and Burundi.
The KOT2, capable of accommodating up to four vessels at a time, was designed to streamline petroleum product handling and reduce costs, consequently making oil more competitive in the region. The facility was part of Kenya's strategic effort to attract more business from neighboring countries and compete with Dar es Salaam.
The standoff also impacted the activation of the 95-meter oil-loading jetty in Kisumu, owned by the Kenya Pipeline Company. The delays in its operationalization underscored the enduring challenges posed by the tussle over fuel imports.
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Uganda is the leading destination for Kenya's exported oil products, including super petrol, diesel, kerosene, and Jet A 1-aviation fuel. Uganda imports approximately 900 million liters of petroleum products monthly from Kenya. In a bid to enhance local employment opportunities and leverage technology transfer, Uganda is banking on a new refinery with a capacity of 60,000 barrels per day to process some of its crude oil domestically. Energy Minister Ruth Nankabirwa has announced that a Dubai-based company, Alpha MBM Investments Llc, has been selected to construct the $4 billion facility.
Additionally, Uganda has granted a license to China National Offshore Oil Corporation to produce liquefied petroleum gas at a plant that will be established in the Kingfisher development area under its operation. Kingfisher is one of Uganda's two major commercial oil development fields, with the second field, Tilenga, being operated by TotalEnergies.
This stems from Uganda's announcement that it would pivot to Tanzania for oil imports, following a deadlock in the effort to register its national oil marketer, Uganda National Oil Company (UNOC), in Kenya to enable imports via the Mombasa port.
Ugandan Energy Minister of Energy Ruth Nankabirwa conveyed concerns about Kenya's persistent hindrance of the UNOC deal. She underscored that Uganda's fuel supply stability is at risk due to Kenya's continuous frustration of the UNOC deal, leading Uganda to explore alternative solutions.
In her statements, Ms. Nankabirwa highlighted Uganda's intent to engage in negotiations with the Tanzanian government to potentially waive some taxes, easing the logistics involved in the alternative route for oil imports.
The decision by Uganda threatens Kenya's investments, including the $385 million Kipevu Oil Terminal 2 (KOT2) in Mombasa, operational since last year, and the $170 million fuel jetty in Kisumu. These investments were put in place to enhance the handling of petroleum products, targeting to double transit capacity to Uganda, Rwanda, and Burundi.
The KOT2, capable of accommodating up to four vessels at a time, was designed to streamline petroleum product handling and reduce costs, consequently making oil more competitive in the region. The facility was part of Kenya's strategic effort to attract more business from neighboring countries and compete with Dar es Salaam.
The standoff also impacted the activation of the 95-meter oil-loading jetty in Kisumu, owned by the Kenya Pipeline Company. The delays in its operationalization underscored the enduring challenges posed by the tussle over fuel imports.
Related To This: Uganda To Dispose $7m Worth of Expired Covid-19 Vaccines Purchased On Loan
Uganda is the leading destination for Kenya's exported oil products, including super petrol, diesel, kerosene, and Jet A 1-aviation fuel. Uganda imports approximately 900 million liters of petroleum products monthly from Kenya. In a bid to enhance local employment opportunities and leverage technology transfer, Uganda is banking on a new refinery with a capacity of 60,000 barrels per day to process some of its crude oil domestically. Energy Minister Ruth Nankabirwa has announced that a Dubai-based company, Alpha MBM Investments Llc, has been selected to construct the $4 billion facility.
Additionally, Uganda has granted a license to China National Offshore Oil Corporation to produce liquefied petroleum gas at a plant that will be established in the Kingfisher development area under its operation. Kingfisher is one of Uganda's two major commercial oil development fields, with the second field, Tilenga, being operated by TotalEnergies.
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