By Hayal Alemayehu

The Ethiopian Petroleum Enterprise (EPE) last week wrapped up an oil deal with Kuwait Petroleum Corporation, the contract marking a milestone for the east Africa nation to access oil directly from one of the world’s big-time producers. The deal, which came on the heels of earlier talks between the governments of the two countries, involves the supply of jet fuel from Kuwait, according to Yigzaw Mekonnen, the general manager of EPE.

Pursuant to the contract, Kuwait Petroleum Corporation will start supplying jet fuel to EPE effective January, when the latter terminates an earlier deal with its former supplier - Fal Oil. A trade house based in Dubai, Fal Oil has been supplying most of the fuel products to Ethiopia, including jet oil.

Kuwait Petroleum Corporation will in the coming year supply a total of 500,000 tonnes of jet fuel to EPE, an amount that wholly covers Ethiopia’s projected consumption for 2011.

While the deal cemented between the two parties exclusively involves the supply of jet fuel, EPE will negotiate with the Kuwait Petroleum Corporation for the supply of most of the other fuel products it imports from elsewhere, according to Yigzaw.

“The advantage of importing fuel products from sources such as the oil-rich Kuwait is significant,” the manager said. “The quality of the fuel product is assured, the supply is reliable and the price is relatively cheaper.”

On his visit to the oil-rich country earlier on, Prime Minister Meles Zenawi had held talks with authorities in Kuwait, where future deal in oil and other areas of business, trade and investment opportunities between the two countries were discussed, according to diplomatic sources. Months after the talks, the oil agenda has borne fruit and is expected to be enhanced in the future, the sources said.

Prior to the deal with Kuwait Petroleum Corporation, EPE had been importing fuel products particularly from the Middle East via trader houses such as Fal oil, which makes the import more expensive than what oil-producing countries offer.

The enterprise concluded a similar deal with another oil producing country a couple of months ago when signing an agreement with Sudan Petroleum Corporation. Sudan has been supplying 80 percent of Ethiopia’s benzene consumption for the last several years. Following the new deal, the corporation has been supplying Ethiopia’s entire benzene consumption beginning last September.

Gas oil (benzene), gasoline, kerosene, jet fuel and fuel oil are the major fuel products EPE imports.

Jet fuel consists of about a fifth of the total volume of fuel products imported into the country while benzene constitutes eight percent.

EPE imports close to 2.2 tonnes of fuel during the last fiscal year while the amount is expected to increase by over 10 percent during the current fiscal year.

Six oil distributing companies: Yetbaberut Beherawi Petroleum, NOC, Kobil Ethiopia, Oilibiya, Nile Petroleum and Total are currently distributing the fuel products EPE imports.

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