French firms take command of Kenyan downstream oil market

Kenya’s oil industry is now controlled by foreign firms, with two French companies sitting at the top of the industry, commanding a third of the market share.

This was after Rubis Energie increased its share in the Kenyan market to 20.1 per cent following its acquisition of Gulf Energy.

Gulf Energy, which had a market share of 5.3 per cent as of June this year, is in addition to last year’s acquisition of KenolKobil, which had a share of 14.8 per cent.

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This would bring Rubis Energie’s total market share – capturing sales in Kenya and exports to neighbouring countries – to 20.1 per cent.

The firm described the Kenyan market as “fast-growing”, especially on energy demands and has sights on further deepening its presence to tap into this potential.

“Higher volumes in this market would allow, in time, to generate significant economies of scale,” said the firm when announcing that it had signed a share purchase agreement with the owners of Gulf.

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“This acquisition, of which the completion is subject to the prior approval of the Kenyan regulatory and competition authorities, fits perfectly with Rubis’ investment objectives and criteria and would increase ideally Rubis’ presence in an area where the Group sees strong growth in terms of energy demand.”

Another French firm Total comes in second, controlling 13.2 per cent of the market.

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The two French oil majors – Rubis and Total – now control a combined 33.3 per cent of Kenya’s petroleum retail market.

Total too has tried to control the market through acquisition and generic growth, having completed an acquisition of Gulf African Petroleum Corporation (Gapco) in early 2017.

This gave the firm control of Gapco’s massive assets, especially storage, which had always enabled Gapco to remain one of the largest petroleum resellers in the country.

Other past acquisitions in Kenya have included that of Elf Oil Kenya Ltd in 2000 and Chevron Kenya Ltd (Caltex) in 2009.

Vivo Energy, owned by Helios Investment Partners, has a 12.5 per cent market share. The firm runs Shell-branded outlets in the country.

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The fourth-largest oil marketer in Kenya is Ola (formerly Oil Libya) with a share of 5.4 per cent, while the State-run National Oil Corporation of Kenya (NOCK) comes in at number five with a dismal 3.3 per cent market share.

Locally owned firm

The acquisition of KenolKobil by Rubis resulted in the disappearance of Kenyan firms at the top of the log, with NOCK being the only locally-owned firm among the top five largest oil marketers.

The cash-strapped NOCK has, however, been experiencing difficulties in the recent past, including being unable to restock its retail outlets, casting doubt whether it can keep up with the multinationals that appear to have taken over the Kenyan market.

The four foreign firms sitting on top of the table control 51.2 per cent of the Kenyan market.

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Kenyan shareholders of small and mid-tier oil marketing companies have in the last few years’ relinquished ownership to foreign firms.

Among those that owners sold all or part of their stake is Hass Petroleum, which sold 40 per cent of its shares to Oman Trading International in 2017.

Hass Petroleum said the acquisition of a 40 per cent stake by Oman Trading International would enable it to embark on a strategic growth and expansion plan across the Eastern, Central and Horn of Africa.

Since the acquisition, the firm has increased the number of outlets, albeit this has not translated to the growth in the market as other firms have also expanded their retail outlets.

Hass had a market share of 2.4 per cent as of June 2019 - less than what it had when it was acquired by Oman Trading.

Hashi Energy also sold its assets to Tanzania-based firm, Lake Oil Ltd in 2017.

Hashi had a share of 6.3 per cent but appears to have lost the momentum, and today Lake Oil‘s market share stands at 1.56 per cent.

According to industry experts analysing the acquisitions then, they noted that smaller companies had spread themselves thin in a bid to expand and grow their share of the market and revenues, leaving many with little to finance daily operations.

This saw them resort to selling a stake or bringing on board strategic investors to enable them to stay afloat.  

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OilGulf EnergyRubis EnergieKenolKobilTotalVivo EnergyCaltexNational Oil Corporation of KenyaOlaOil Libya