Saudi Arabia, UAE Firms To Supply Kenya with Fuel for Six Months

kenya oil deal
Energy and Petroleum CS David Chirchir (Centre). [COURTESY]

Kenya has agreed to a deal with Saudi Arabia and the United Arab Emirates to receive diesel and super for the next six months, Energy Cabinet Secretary Davis Chirchir has said.

Abu Dhabi National Oil Company will provide three cargoes of super petrol every month, he added.

The deal, which was finalized on Friday, was a result of the government’s request for bids for the sale of diesel and super fuel products, which drew seven proposals from various companies.

The agreement, involving Saudi Aramco, according to Chirchir, will relieve pressure on the Kenyan government, which has been experiencing a shortage of oil products as a result of the Covid-19 outbreak.

Saudi Aramco is the world’s largest oil producer and recently acquired the US company Valvoline, which gave it a local foothold in Kenya. The UAE National Oil Company Group is the third participant chosen by the government to take part in the oil import agreement.

“The product will now be paid for in Kenyan shillings and this will ensure the dollar is available for other sectors of the economy,” Mr Chirchir said.

He added: “The proposed transaction is expected to alleviate the demand for dollars driven by petroleum imports by extending the time required to source for the dollars from the current five days to 180 days.”

The CS noted that Adnoc, Aramco, and Enoc will supply oil to designated local suppliers in Kenya, who will be the only ones needed to make payments in dollars after the six-month period.

The designated suppliers will no longer require dollars to guarantee their orders because they will sell the petroleum to the remaining local players in Kenyan shillings.

The government will then assume the currency risk by supporting the designated oil marketers who will be interacting with the Middle Eastern oil suppliers.

Kenya needs an additional 85,000 metric tonnes of diesel, 60,000 metric tonnes of super, and 40,000 metric tonnes of jet fuel this month, says Principal Secretary for Petroleum Mohamed Liban in a letter to oil marketers.

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Written by Kahawa Tungu


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