Shell firms grip on Kenya market with Engen deal


Monday February 13 2023


Engen fueling station. FILE PHOTO | NMG

Vivo Energy Kenya, the retailer of Shell and biggest oil marketer in the country, will acquire a controlling stake in South Africa’s Engen under an Africa-wide multi-billion-shilling deal that will deepen its dominance of the local market.

This is part of a global deal where Vivo Energy Group Plc has agreed to buy the 74 percent shareholding stake that Malaysian state energy company, Petronas holds in Engen.

The deal whose value and completion timelines remain undisclosed will offer Vivo Energy Kenya an opportunity to grow its market share in Kenya, ramp up revenues and widen the gap against rivals TotalEnergies and Rubis.

Read: Vivo commands quarter of 2022 fuel product sales

“The transaction value remains confidential. Upon completion of the transaction, and the combination of the Engen and Vivo Energy businesses, we will create one of Africa’s largest energy distribution companies, setting us up to be stronger and more successful than ever before,” Vivo Energy told the Business Daily.

The number of Engen fuel stations in Kenya remains undisclosed but the oil marketer’s footprint is mainly concentrated in Nairobi.

Engen has 1,300 fuel stations across seven African countries while Vivo has more than 2,600 service stations across 23 African countries.

Petronas first acquired shares in the South African oil market in 1996 and became its majority shareholder two years later.

Vivo Energy Group Plc added that it will maintain and build the Engen brand in the new markets as part of the purchase deal.

“Vivo Energy intends to maintain and build the Engen-brand in the new markets,” Vivo Energy Group Plc said.

Vivo Energy Kenya accounted for 23.83 percent of the fuel sold in Kenya in the six months to June last year, according to the Energy and Petroleum Regulatory Authority (Epra), underlining the oil marketer’s dominance.

Its parent company – Vivo Energy Group Plc – disclosed that the Kenyan operations made Sh114 billion ($924 million) in revenues in the first half of last year, a 30.6 percent jump from Sh87 billion ($707 million) in a similar period the year before.

But Engen did not feature in the list of the top 15 oil marketers, according to the Epra data, in the Kenyan market where the well-oiled multinational dealers are deepening their footprint in the vicious fight for the market.

The Epra data show that Vivo Energy Kenya sold 1.367 million cubic metres of fuel in the six months to June last year, followed by TotalEnergies Marketing Kenya which sold 992, 464 cubic metres or 17.3 percent and Rubis Energy Kenya which sold 574,975 cubic metres or 10.02 percent of the total sales.

TotalEnergies opened its 232nd fuel station last week while Vivo Energy Kenya announced plans to open an additional 20, highlighting the vicious fight for the Kenyan market.

The acquisition of Engen is the second major deal by Vivo Energy Group Plc after the firm completed its take-over of Shell in 2017.

Rubis, the third biggest oil marketer in Kenya, acquired KenolKobil in 2019, in a deal that allowed Rubis to grow its share of sales and increase competition with Vivo Energy Kenya and TotalEnergies Marketing Kenya.

The deal comes at a time of heightened activity in the local petroleum market with the State keen to revive the National Oil Corporation of Kenya through a government-to-government deal for the importation of fuel.

Read: High fuel use drives Vivo half-year revenue to Sh26bn

Engen’s acquisition is the second similar deal in less than six months in the Kenyan petroleum market after Saudi Aramco, the world’s biggest oil producer, bought motor oil and lubricants group Valvoline.

Aramco Overseas Company, the investment arm of Saudi Aramco, got the nod to acquire the Kenyan operations of VGP Holdings as part of the global deal worth $2.65 billion in December last year.

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Beryl Onyango

Beryl Onyango is a CPA and economics degree holder who has dedicated her career to helping others navigate the complex world of finance. Beryl has spent the past 3 years working as a finance specialist in a fintech company and has 6 years of experience in finance, working with a diverse range of clients and industries. Beryl's expertise lies in budgeting, saving, investing, and retirement planning, but she also has a deep understanding of various other areas of finance. She is interested in financial technology and how it changes how we manage our finances. As a finance writer, Beryl has been sharing her insights and knowledge through her writing, covering various finance and personal finance topics. Her goal is to educate and empower individuals to take control of their finances and achieve their financial goals. In addition to her professional experience, Beryl is a lifelong learner, always seeking to expand her knowledge and stay up-to-date with the latest developments in finance. She is also a strong communicator, able to explain complex financial concepts in a clear and easy-to-understand manner. Beryl believes that financial literacy is the key to achieving financial success, and she is dedicated to helping others achieve their financial goals.

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