Kenya extends petroleum supply deal with Gulf firms

Kenya announced on Tuesday that it had further extended an agreement with three Gulf companies for the delivery of oil, which has helped to ease pressure on the shilling.

Originally reached in March of last year, the agreement with Saudi Aramco, Abu Dhabi National Oil Company (ADNOC.UL), and Emirates National Oil Company was extended in September 2023 to this month.

In a statement summarizing the decisions from its most recent meeting, the Cabinet announced that it had granted another extension, but it did not specify how long it would last.

Kenya was able to abandon the previous petroleum procurement method, which depended on an open tender where local businesses would compete to import oil each month, thanks to supplies from the three companies.

Instead of needing roughly $500 million each month to pay for imports, the agreement with the Gulf companies includes 180-day credit terms, allowing the nation to gradually save cash for the purchase.

The Cabinet issued the following statement: “This arrangement has eased the monthly demand for U.S. dollars for petroleum imports, stabilizing the shilling-dollar exchange rate.”

It also stated that the arrangement has assisted in lowering consumer pump prices.