Kenya Petroleum Refineries Ltd will from January next year start importing its own crude oil for processing and selling to the Kenyan and export markets in order to ease the perennial fuel shortages in the country. Energy Minister Mr Kiraitu Murungi said the model of operations is set to change in the next five months with KPRL importing crude oil and selling products at competitive prices.

The business model will change from a toll plant charging processing fees to a merchant refinery with petroleum products from crude oil refined at Mombasa being sold to marketers at import parity price. Mr Murungi said that “The facility is currently a toll refinery that processes crude oil imported through the open tender system (OTS) managed by the Ministry of Energy on behalf of marketers at a fee.”

Under OTS, the lowest bidder imports either crude oil for processing by the plant in Mombasa or refined petrol, diesel and Jet A-1 on behalf of other marketers. KPRL meets 40% of Kenya’s fuel needs. Marketers currently import and process 1.6 million tonnes of crude annually. KPRL will from January make arrangements to finance crude oil importation.

The Ministry of Energy on May 24, 2011 awarded Gulf Energy and KenolKobil tenders to import 160,000 metric tonnes of Murban crude oil for July delivery. With a bid of $0.788 as freight and premium per barrel, Gulf Energy has to ensure first cargo of 80,000 metric tonnes of crude oil for processing arrives at Kipevu Oil Terminal in Mombasa from July 12 to 14 this year.

KenolKobil has a second consignment of 80,000 tonnes of Murban crude scheduled to arrive in July. Hydrocarbons Management Consultants said to need to avoid litigation led to rescinding of refinery closure as long term contracts with marketers require adequate notification of changes.

(Sourced from THE EAST AFRICAN)