New oil storage facility to end supplies glitch

New oil storage facility to end supplies glitch

By John Oyuke

Fuel shortages could end after an international energy storage and terminal giant, VTTI, opened a Sh5.2 billion ($60 million) oil storage terminal in Mombasa.

VTTI Kenya, in Kipevu, has the capacity to store 110,000m3 of oil, making it one of the largest liquid petroleum storage facilities in East Africa.

The first phase of the storage terminal was completed in March last year and includes six tanks, while Phase II, comprising four tanks, was finalised at the end of last year ahead of commissioning of the facility.

The terminal was commissioned when 9,600m3 of automotive gasoil from MT Uzava was shipped to Vivo Energy Kenya.

“The receipt of the first product represents a significant milestone for our VTTI Kenya terminal, a major new landmark on the energy landscape of Kenya,” the terminal’s General Manager, Merlin Figueira said.

 The investment in the terminal is part of the company’s African expansion plans, he added in a statement.

The new fuel storage terminal that would be used by oil marketers on lease terms is expected to provide an alternative to the current strained national storage tanks at the Kipevu Oil Storage Facility (Kosf).

Investors are deprived of independent storage to suit their demand to service East Africa and its hinterland.

Extra storage is critical to oil marketers in the region because of the thin margins from sales. In fragmented markets such as east Africa’s where margins are small, bulk supplies hold the key to profitability.

Kosf receives imported refined products, both distillates and spirits, and has a storage capacity of 326 million litres while its operational capacity is 269 million litres.

This comprises 58 million, 108 million and 103 million litres of petrol, diesel and dual-purpose kerosene, in that order.