Total, Shell cede market share to smaller oil firms

Kenya’s top-three oil market majors Total, Shell and KenolKobil lost a combined four per cent market share in the first three months of the year as their smaller rivals gained in domestic volume sales.

The three oil marketers had a 50.6 per cent share in the period, down from 54.5 per cent a year earlier according to data from the Petroleum Institute of East Africa (PIEA).

Top oil marketer, Total, recorded the largest drop of 1.5 percentage points to emerge with a share of 20.2 per cent in the period.

Shell, the trading name of VIVO Energy, lost one percentage point to 17.9 per cent market as it retained its second position after Total.
KenolKobil ceded 1.4 percentage points market share to 12.5 per cent.

Hashi, Gulf, and Fossil are among the smaller firms that gained market share in the period when total sales of products like diesel, petrol and kerosene rose 12.5 per cent to 1.35 million cubic metres.

Gulf’s market share nearly doubled to 5.5 per cent in the period compared to 2.8 per cent in last year’s first quarter, while Hashi and Fossil each jumped by one percentage point to 5.5 per cent and 2.6 per cent respectively.

These firms have invested heavily in the local and regional petroleum distribution business, mirroring the strategy employed by their more established rivals.

Their expansion has loosened the grip of the top three firms in Kenya where they controlled over two-thirds of the market in previous years.

Smaller oil marketers have mainly targeted medium-sized firms for bulk supplies including public transport and logistics firms while the big three sell to a broad customer base including motorists, airlines, emergency power producers and some of the smaller oil firms.

The rivals are competing on customer convenience and wider distribution network to grow sales, with some also running promotions and small discounts on their loyalty cards.

A wider footprint is critical in driving sales of products like diesel, petroleum and kerosene to motorists and households. The bigger oil marketers have more retail outlets compared to their smaller rivals.

State price controls have tamed price wars among the fuel companies, making market presence and strategic locations key factors in winning customers who don’t have to seek bargains at various outlets.

The oil marketers’ profit margins are capped by the Energy Regulatory Commission (ERC).