Efforts to streamline petroleum products storage and transportation in Kenya have received a significant boost following the commissioning of a bulk storage facility in the coastal town of Mombasa. The new oil terminal, at Kipevu, with a capacity of 110-million litres, is owned by international energy storage and terminal company VTTI.
The facility, which was bulit at a cost of $60- million, is one of the largest liquid petroleum storage facilities in East Africa.
“Receipt of the first product from MV Uzava represents a significant milestone for our VTTI Kenya terminal, a major landmark on the energy landscape of Kenya,” says Merlin Figueira, GM of VTTI Kenya, a subsidiary of VTTI.
The commissioning of the new facility is expected to ease pressure on the Kipevu oil storage facility (KOSF), whose capacity has in recent years been overstretched owing to the rising demand for petroleum products in the East Africa nation.
Major constraints at the KOSF, which is owned by the Kenya Pipeline Company, have often been blamed for the high prices of petroleum products, as oil marketers incur about $100-million a year in demurrage costs.
With a storage capacity of 326-million litres and an operational capacity of 269-million litres, the KOSF’s capacity has been inadequate to meet regional demand for petroleum products, which stands at 450-million litres a month.
The KOSF’s woes are worsened by low product evacuations and low flow rates of product to inland Kenya and neighbouring countries.
Over the past three years, petroleum imports have averaged 3.95-million tons a year and accounted for a quarter of the country’s import bill. Demand for petroleum products is projected to rise by an average of 3.4% a year over the next 17 years. The added capacity created by VTTI will help to meet the rising demand not only in Kenya but also in neighbouring countries like Uganda, Rwanda, South Sudan and the Democratic Republic of Congo.
Figueira says the decision by VTTI to invest in the terminal is part of the company’s strategy to extend its tentacles into East Africa. VTTI also operates a liquefied petroleum gas terminal in Nigeria. VTTI is an international energy storing and terminal group formed in 2006 and is 50%-owned by the Vitol group and 50% by MISC Berhad, of Malaysia.