Gulf Energy at the centre of yet another 'dirty fuel' drama

Just weeks after being exposed as the catalyst for a near-catastrophic fuel shortage that forced Kenya into an emergency oil deal, Gulf Energy Limited is at the centre of a fresh scandal.

This time, the firm is fighting to dock a consignment of fuel so toxic that State officials initially refused to let it ashore, only for the government to waive public health and environmental standards to allow it through.

Drama has been unfolding at the Port of Mombasa over the last week after officials from different State agencies denied entry to an even dirtier consignment of fuel.

The cargo, which was eventually allowed entry after intervention by the Trade and Energy ministries, was denied entry after it was found to contain significantly high sulphur content. 

The 85,000 tonnes of fuel, imported by Gulf Energy and carried by Marshall Islands flagged vessel Baniyas, has sulphur content of 50 milligrammes per kilogramme (mg/kg) against the required 10mg/kg.

Officers from the Kenya Bureau of Standards and the Kenya Pipeline Company (KPC) were unwilling to compromise and let Baniyas discharge the fuel.

“The offices were adamant this time round. They had been subjected to questioning and were also made to write statements by the DCI after they allowed the discharge of the cargo brought by One Petroleum that later turned out to be sub standard,” said a source, who noted the insistence by the Kebs and KPC officials was despite calls from senior officials from the Energy and Trade ministries. 

The Ministry of Trade and Industry on Thursday last week waived the stringent requirements on fuel imports, allowing in diesel and super petrol with higher sulphur content.

The developments come amidst claims that one of the Gulf oil firms supplying fuel to Kenya under the controversial Government-to-Government framework had been pressuring Kenya to waive the standard, citing unavailability of petroleum products globally.

The firm had at some point threatened to invoke force majeure clauses in the agreement it has with Kenya if the country did not relook at its low sulphur requirements. 

In a statement on April 30, Lee Kinyanjui, the Cabinet Secretary Ministry of Trade and Investment said the Ministry had temporarily raised the sulphur limit to a maximum of 50mg/kg for both diesel and petrol.

“This measure is temporary and intended to ensure continued fuel availability and sustain economic stability during the current period of global supply disruption,” Kinyanjui said in the statement, adding that this would be reviewed after six months.

The Energy and Petroleum Ministry had earlier, on April 27, notified Saudi Aramco, one of the Gulf oil firms that supplies Kenya with fuel under the Government-to-Government agreement, that Kebs had suspended for two months the standard requiring fuel imports into Kenya to have low sulphur content.

In the letter, acting Principal Secretary M.B Mohamed said that the East African Community (EAC) Standards Council approved and passed a resolution to implement revised Automotive Gasoline (premium motor spirit) and Automotive Gas Oil (AGO) standard that requires imports to have low sulphur, which Kenya had adopted.

Mohamed, however, added that the situation in the Gulf had complicated matters and necessitated the suspension of the low-sulphur regime.

“We further note that due to the current disruption of global petroleum supply chains arising out of the crisis in the Middle East, immediate compliance from the supply side may pose a challenge. You are therefore granted a grace period of two months from the date of this letter to ensure compliance,” said the letter to Saudi Aramco by Mohamed.

The latter statement by the Trade and Industry ministry has extended this duration to six months.

Sources said the ministry had also written to the other Gulf oil majors, Abu Dhabi National Oil Company (Adnoc) and the Emirates National Oil Company (Enoc), informing them of the relaxed standards.

The wait by the officials for an official waiver meant that the vessel could not discharge fuel but also resulted in other ship tankers delivering fuel to Kenya being held up in a line. This saw fuel in KPC systems running low, resulting in the shortages that were reported in the country over the weekend and in the course of this week.

On Wednesday, the Energy and Petroleum Ministry attributed the shortages to an administrative hitch, which resulted in oil marketing companies unable to access fuel but said the matter has since been resolved.

“The temporary fuel supply challenges experienced in isolated filling stations in some parts of the country arose from a technical and administrative hitch. This curtailed the optimal uptake of petroleum products by a few oil marketing companies operating in the downstream of the supply chain,” said Cabinet Secretary for Energy and Petroleum Opiyo Wandayi in a statement yesterday.

“Fuel restocking in various filling stations is underway and normal supply across the country will be attained by the end of day today (Wednesday),” Wandayi said.

But on the onset of the fuel crisis, Gulf Energy was already being mentioned within government circles.

Documents obtained by The Standard reveal how Gulf Energy Limited, a nominated oil marketing company entrusted with a critical fuel supply contract, failed to deliver, forcing the Ministry of Energy to invoke emergency powers and bypass the normal supply system.

A National Security Council Committee letter dated March 9 instructed the Ministry of Energy to explore and implement strategies to avert national energy crisis, even if it meant going outside the G2G deal.