Kenya has found a buyer for its first batch of crude oil in a deal that will see the commodity fetch a better return compared to the current market prices roiled by US-China trade tensions.
The Petroleum and Mining Ministry yesterday said Chinese firm ChemChina through its London-headquartered trading arm was selected from a list of eight firms that had bid to buy the country’s 200,000 barrels of oil produced on a pilot basis.
The Government on August 1 announced that the oil produced in Turkana and stacked at the Kenya Petroleum Refineries Ltd’s (KPRL) storage facilities in Mombasa would be sold at Sh1.2 billion ($12 million).
This would mean that Kenya’s crude has been sold at an average of $60 per barrel (Sh6,180).
This is compared to yesterday’s international market prices where Brent crude oil was trading at $58 (Sh5,974) following a sustained decline, pressured by mounting recession concerns and a surprise boost in US crude inventories.
This would mean that Kenya’s oil would be going for a premium of over $1.60 (Sh164.8) per barrel.
The ministry said ChemChina UK Ltd had outbid seven other companies from Europe and Asia that had expressed interest in acquiring Kenya’s oil.
“ChemChina UK Ltd was selected following a competitive tender process through which an invitation to bid was issued to prospective buyers on 26th July 2019 and to which there was strong response with eight bids received from international firms representing European and Asian refineries,” said the ministry in a statement.
“Note that ChemChina UK Ltd was selected on the basis of their offered price and according to standard international terms.”
ChemChina – also referred to as the China National Chemical Corporation – operates in six different sectors, including oil processing, agrochemical production and tire and rubber production.
Information on its website says it has nine refineries with a combined annual crude oil processing capacity of 25 million tonnes.