A subsidiary of global oil giant Saudi Aramco plans to inject cash to upgrade the oil storage facilities at the port of Mombasa as it sets its sights on the larger regional petroleum market.
Documents from the Ministry of Energy show that the Kenyan government is in advanced discussions with the oil major to secure financial investment to upgrade oil storage facilities at the port.
The documents show that Saudi Aramco is keen to use Mombasa as its hub to target the regional market, bolstering the port’s dominance as the gateway of petroleum products to the landlocked countries in the region.
“ATF (Aramco Trading Fujairah FZE) is willing to partner with GoK (Government of Kenya) in the conversion of Mombasa to a trading hub by investing in storage facilities with a long-term view to supply the region through transshipments from the Mombasa hub. Discussions on investments in storage facilities are ongoing,” the documents seen by Business Daily read in part.
Aramco Trading Fujairah FZE is an international office of Aramco Trading Company, a subsidiary of Saudi Aramco, based in Fujairah, UAE. The office handles Aramco Trading's petroleum and fuel oil storage and blending activities.
A transshipment hub is a port where containers are temporarily unloaded, transferred, and reloaded onto other vessels for transport to the end market.
Modern storage facilities and transport networks have given the port of Mombasa the upper hand in its struggle for regional dominance over its rival, the port of Dar es Salaam.
Landlocked countries in East and Central Africa rely on the port of Mombasa to import petroleum products and other goods.
The reliance on the port of Mombasa is largely attributed to the modern storage and transport facilities. Uganda, for example, relies on the port of Mombasa to import its fuel directly.
Mombasa is also closer to countries like Uganda, Rwanda, Burundi, and South Sudan, compared to Dar es Salaam, underlining why the Kenyan port is the preferred entry point in the region.
Saudi Aramco’s investment will shore up a port that last year opened its most modern facility yet—Sh40 billion Kipevu Oil Terminal 2, which has four berths (three for handling fuel and one for cooking gas). The four allow for four vessels to discharge product simultaneously, helping to significantly cut demurrage charges incurred by oil firms.
The Saudi government directly owns 81.5 percent of Aramco, while its sovereign wealth fund controls an additional 16 percent. Saudi Aramco is the world’s most profitable firm, with a profit of $120 billion last year, ahead of Apple and Google.
The investment, whose value remains undisclosed, will mark the second major petroleum deal between Kenya and Saudi Aramco, after the fuel import agreement.
Saudi Aramco supplies diesel and petrol to Kenya under a 180-day credit period in a deal that started in April 2023, as Kenya sought to ease its monthly demand for dollars and help prop up the shilling.
The other Gulf oil majors supplying diesel and jet fuel to Kenya under the agreement are Abu Dhabi National Oil Company and Emirates National Oil Company.
The port of Mombasa has increasingly attracted oil marketers keen to set up storage facilities for the importation of fuel and cooking gas.
They include Asharami Energy, which is owned by Sahara Group of Nigeria, Taifa Gas and Lake Oil of Tanzania. The trio are building facilities to handle imported cooking gas.
Asharami Synergy targets to build a Sh17.7 billion common-user cooking gas import facility under a build-operate-transfer model - a contract whereby an entity, usually a government, grants a concession to a private company to finance, build and operate a project.
The planned common-user LPG facility in Changamwe is expected to have a capacity of 30,000 tonnes and targets to allow the government to bring the importation of cooking gas under the open tender system and ultimately control the prices of the commodity.
Another firm, Focus Container Freight Station Limited, plans to set up a new 15,000-tonne cooking gas storage plant in Kipevu, Mombasa.
