Details of Sh93.7bn Kenya Pipeline crude storage deal with Gulf Energy

The Kenya Pipeline Company (KPC) has entered into a long-term crude oil storage and handling contract with Gulf Energy, potentially generating about Sh93.68 billion in gross revenue over 25 years.

In a notice dated August 26, 2026, the KPC Board of Directors noted that the agreement has been signed by Kenya Petroleum Refineries Limited (KPRL), a wholly owned subsidiary of KPC, and Gulf Energy E&P B.V.

Under the contract, KPRL will provide facilities and services for the receipt, storage, handling and delivery of crude oil for export through Kipevu Oil Terminal II (KOT II).

KPC, however, cautioned that the Sh93.68 billion figure is an internal projection rather than guaranteed income.

"Current internal projections estimate gross revenue of approximately Sh93.68 billion over the 25-year contract period. This estimate is, however, based on projected throughput and tariff assumptions and does not constitute a guaranteed revenue commitment."

The deal comes as Gulf Energy increasingly expands beyond its traditional downstream petroleum business into oil exploration and production.

For years, Gulf Energy's interaction with KPC largely revolved around the transportation and storage of refined petroleum products.

As an oil marketing company, Gulf Energy used KPC's pipeline network to move petroleum products from Mombasa to storage and distribution facilities serving the Kenyan market.

The relationship became more significant under Kenya's Government-to-Government fuel import arrangement introduced in 2023.

Gulf Energy became one of the local companies involved in the importation and handling of petroleum cargoes, while KPC provided the infrastructure through which imported products were received, stored and transported into the country.

The company is now pursuing an upstream oil strategy, including its acquisition of interests in the South Lokichar Basin in Turkana, while KPC is positioning its infrastructure to participate in the movement and export of crude oil.

The new KPRL agreement specifically provides for crude oil to be received and handled before being exported through KOT II.

This gives the KPC subsidiary a role in the logistics chain associated with Gulf Energy's crude oil operations.

The development comes as KPC itself undergoes a major transformation.

The company was listed on the Nairobi Securities Exchange (NSE) in March 2026 following the government's partial privatisation of the pipeline operator. In addition, the public offering involved the sale of a 65 per cent government stake, while the State retained 35 per cent.

The initial public offering raised more than Sh106 billion, making the transaction one of Kenya's most significant state divestitures in years.

Also, the company's transition into a publicly traded entity has  increased the significance of commercial agreements capable of supporting its long-term revenue outlook.

The Gulf Energy contract is therefore being presented by KPC as part of the company's broader effort to diversify its revenue sources and optimise existing infrastructure.

Under the agreement, KPRL will earn fixed service fees while also recovering qualifying variable costs associated with the services provided.

KPC said the contract supports the commercial utilisation of KPRL's existing and upgraded infrastructure while broadening its participation in petroleum logistics.

At the same time, Kenya Pipeline and the Kenya Ports Authority (KPA) have revised their Service Level Agreement governing the operation and maintenance of KOT II.

KOT II is owned by KPA and serves as the marine interface through which petroleum products are received for transfer into KPC's pipeline and storage network.

The revised agreement replaces the previous arrangement and sets out the responsibilities, service standards and coordination mechanisms between the two institutions.

KPC said the revised agreement is intended to strengthen accountability, performance monitoring, maintenance coordination and business continuity at the terminal.

Unlike the Gulf Energy contract, the KOT II agreement is not expected to have significant direct monetary value for KPC.

Its importance is operational, given the terminal's role in the movement of petroleum products through the country's supply system.

KPC said it will continue monitoring implementation of the agreements and make further disclosures where required under applicable law and NSE listing rules.