Kenya extends oil supply deal with Gulf companies

Kenya has extended an oil supply deal with three Gulf companies, easing pressure on its currency, the shilling, it said on Tuesday.

The agreement with Saudi Aramco, Abu Dhabi National Oil Company and Emirates National Oil Company was initially concluded in March last year and was extended in September 2023 until this month.

The cabinet said in a statement outlining decisions taken at its last meeting that it had approved a further extension, but did not specify its duration.

Supplies from the three companies allowed Kenya to abandon the old oil supply system which relied on open tender in which local companies bid to import oil every month.

The deal with Gulf companies comes with 180-day credit terms, allowing the country to accumulate dollars for timely purchasing rather than needing around $500 million each months to pay for imports.

The cabinet said in a statement: “This agreement helped ease the monthly workload of Gulf companies: “This agreement helped ease the monthly demand for US dollars for oil imports, thereby stabilizing the rate shilling-dollar exchange rate.

The deal also helped lower pump prices for consumers, he added.