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Shipping & Logistics

Kenyan market for Iran gas heats up after UN ban lifted

Kenya Oil Refinery at Changamwe. The refinery could get a lifeline in Iran crude oil imports plan. PHOTO | FILE
Kenya Oil Refinery at Changamwe. The refinery could get a lifeline in Iran crude oil imports plan. PHOTO | FILE 

Kenyan firms have stepped up import of gas from Iran, setting the stage for renewal of collapsed commercial treaties, almost five months after the United Nations lifted its economic sanctions on the Middle East state.

Iran-based independent Tasmin News Agency has reported that several tonnes of gas have been shipped from Iran to Kenya, Tanzania and South Africa.

Kenya’s Petroleum Principal Secretary Andrew Kamau, however, denied knowledge of such imports.

He told the Business Daily: “I haven’t confirmed with the Kenya Revenue Authority whether Kenyan traders are importing gas from Iran. If they are doing so, then that can only be small quantities of liquefied petroleum gas (LPG) but definitely not liquefied natural gas (LNG).”

Iran — which has the world’s second largest proven gas reserves after Russia – plans to build a capacity to export 40 million tonnes of LNG a year, making it a critical play in the natural gas segment.

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The LNG —natural gas converted into a liquid by cooling it to -260° Fahrenheit —is used for heating, cooking, generating electricity and manufacturing. It is also used as a fuel for heavy-duty vehicles.

Tasmin News Agency quotes Mr Esmaeel Hasham Firouz, an export-import director of the National Iranian Oil Products Distribution Company (NIOPDC), as having said that several tonnes of natural gas packed in tank containers have been sold in Kenya.

Another private news agency, Shana, has also reported that two consignments of LNG ISO tank containers were cleared in Kenya in February alone.

Shana quotes an official of Iranian Offshore Oil Company (IOOC), Mohammad Reza Safari Rad as having said that cargo to Kenya were supplied from NGL refinery in Siri Island.

The said refinery processes 143 million cubic feet per day of the associate gas delivered to the refinery from oil platforms near Siri Island in the Persian Gulf.

“The treated gas is delivered through a 83-km pipeline to Kish Island and a 104-km pipeline to Gheshm.” Shana quotes Rad as having said. Iran has been yearning for a bigger slice of Kenya’s energy market.

It had in May 2012 signed a trade pact with former President Mwai Kibaki’s administration to import 80,000 tonnes of crude oil.

The deal was later cancelled, hardly two months later, to avert a diplomatic row with US and other states in the West.

Iran has since struck a nuclear deal with several Western powers under which it has agreed to give up 99 per ent of its enriched uranium and allow for close nuclear monitoring, paving way to the lifting of the sanctions by mid-January.

While Iranian ambassador to Kenya Hadi Farajvand has recently indicated that his country is still keen on safeguarding oil and gas export by reviving the MoU with Kenya, the latter has given conflicting signals.

Export of crude oil would, for instance, call for the upgrading of its Changamwe-based Kenya Oil Refinery facility.

The energy and petroleum ministry had initially announced plans to rehabilitate that facility at cost of Sh200 billion ($2 billion).

In February, State House indicated that the Mombasa-based refinery may be used to provide temporary storage of Kenya’s own crude oil ferried to the Coast by trucks and trains.

Under the plan, crude oil ferried from Lokichar —where Kenya has confirmed its own reserves of about 600 million barrels – will be collected at the refinery until it reaches export quantity.

Apart from Kenya, Uganda has also discovered about a reserve of about 1 billion barrels while natural gas has been found in Tanzania. The discoveries further blur Iran’s vision to become a major player in East Africa’s oil and gas market.

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