Kenya eyes new fuel import routes as Hormuz uncertainty persists

Kinyua said the move is part of the government’s strategy to ensure a steady fuel supply amid ongoing uncertainties surrounding the Strait of Hormuz.

In addition to identifying new routes, he noted that the country is also sourcing fuel from a broader range of global suppliers to reduce overreliance on the Middle East.

“We have signed a master framework agreement with international suppliers, obligating them to supply fuel regardless of external circumstances. Instead of sourcing solely from one region, suppliers are diversifying to markets in Europe and the Far East,” Kinyua said.

“Additionally, more products are now being loaded from the Red Sea side rather than the Strait of Hormuz, taking advantage of that route,” he added.

Kinyua further disclosed that the government is considering additional measures to mitigate fuel shortages. He said the country recently developed strategic stocks regulations that will allow a major player to store petroleum at port facilities, with the government retaining the first right of use.

According to him, the framework mirrors practices in global hubs such as Rotterdam and Singapore.

Addressing the Government-to-Government (G-to-G) fuel import arrangement, which has recently sparked debate, Kinyua defended the model, describing it as beneficial to the country.

He said one of its key advantages has been stabilising the US dollar, a critical factor in fuel pricing since petroleum products are purchased internationally in dollars and converted into Kenyan shillings locally.

“Due to a lack of available dollars, fuel supply was initially not flowing as expected. From a macroeconomic perspective, releasing these dollars to other sectors of the economy helped improve the situation,” he explained.

“When the Government-to-Government arrangement was introduced, interbank trading had essentially stalled because of the dollar shortage. However, interbank trading has now reopened, dollars are flowing, and the economy is performing well,” he added.

Kinyua further explained that the arrangement involves three international oil companies owned by foreign governments: Aramco Trading Fujairah Limited (Saudi Arabia), Emirates National Oil Company (ENOC), and Abu Dhabi National Oil Company (ADNOC).

He noted that these firms oversee the entire supply chain, including importing, offloading, and distributing petroleum products locally.

However, as international entities, they do not directly engage in local trade. Instead, they appoint representatives to manage operations on their behalf.

Responding to concerns about why the government did not include its own representative in the supply chain, Kinyua said the international firms preferred to work with trusted partners due to risk considerations and insisted on nominating their own counterparties.