KenolKobil wins oil supply tender but raises concerns over piracy

KenolKobil Ltd has won the Kenyan government tender to deliver crude oil and diesel in the month of January 2010.

It however raised concerns over increased risk of delivering products to the East African coastline due to rising cases of piracy in the Indian Ocean.

The Nairobi-based oil dealer won the Industry Open Tender for the two crude oil cargoes — amounting to 160,000 tonnes, or about 1.2 million barrels — of Murban Crude.

The product is required for refining at the Mombasa-based refinery for consumption in the local and neighbouring markets.

The company will also supply 40,000 metric tonnes of diesel for delivery at the end of this year as per the tender floated and supervised by the Ministry of Energy.

Under the ministry’s Open Tender System, the company will be able to supply to other marketers.

KenolKobil has been a dominant player in the supply of crude and refined products under the OTS.

“Already, many reputable vessel owners have expressed their reluctance to sail to the Indian Ocean to deliver products due to the piracy menace that started along the Somali coastline but has now spread widely in the ocean,” said KenolKobil’s public relations manager, Charles Njogu.

The latest piracy incident occurred on November 20, when the Margarita was attacked by six pirate boats while on its way back to the Gulf after delivering products in Mombasa for local oil marketers.

At the time of the attack, she was 950 nautical miles off the nearest mainland coast and 450nm off the Sychelles.

The grenades fired at the vessel punctured the accommodation and life rafts.

Declared a War Risk Zone

Many other piracy attacks in the Indian Ocean recently have interrupted supplies of petroleum products to East Africa.

“There are all indications that the entire Indian Ocean will be declared a War Risk Zone by vessel owners soon,” Mr Njogu observed.

The reluctance by vessels to sail the route is likely to affect the normal supplies to the local and regional markets that depend on Kenya and Tanzania for their supplies, he added.

Vessels willing to sail the route are charging significantly high deviation fees and risk insurance premiums, raising the cost of products.

KenolKobil has subsidiaries in Uganda, Tanzania, Zambia, Rwanda, Ethiopia and Burundi.