Photo: Ann Weru/IRIN

Ngamia-1 well: The site of Kenya's first oil discovery, the Ngamia-1 well continues to yield high payouts for oil companies.

State owned oil marketer National Oil says it cannot effectively compete with independent oil companies operating so long as it remains registered under the Companies Act but continues operating under the State Corporations Act. Managing director Sumayya Athmani said unlike private oil companies National Oil is subject to the Public Procurement and Disposal Act which delays quick action in key business deals. "We have lost several deals to private players since our competitors are able to move quickly unlike us who have to follow lengthy procedures," she said.

Speaking at a media breakfast, Athmani said balancing between commercial interests while at the same time operating as a state corporation is challenging especially in a competitive business environment like the energy sector. She said National Oil has to further balance between stabilising prices while at the same time remaining profitable.

To help stabilise prices and ensure availability of quality fuels, Athmani said the company now has a footprint of 85 outlets countrywide. "We are also pursuing government to government contracts to reduce the cost of supply," she said. She said the company also plans to expand its LPG filling station in Nairobi and set up another in Mombasa to help increase the use o LPG. It is also increasing the outlets for its 3kg cylinder to reach a wider market.

The MD said the tender for the feasibility study for the planned offshore jetty in Mombasa will be advertised next month while the construction work should commence in the second quarter of next year. "We are also to enter in a public private partnership for the setting up of strategic petroleum reserves at a cost of 1.5 billion US dollar," she said.

On the Turkana oil finds by Tullow, Athmani said the confirmation of the commercial viability of the deposits might take much longer and it might be another six year before oil starts flowing. "The Turkana oil will not be flowing by December this year at our petrol stations despite the high expectations from Kenyans," she said. Athmani said National Oil is also involved in oil exploration around Magadi in Kajiado district where more than 400 samples have so far been recovered and are undergoing analysis.