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PetroChina wins USD 1 bln fuel supply tender

PetroChina wins USD 1 bln fuel supply tender

The Chinese oil and gas giant, PetroChina, has won fuel supply bid floated by the Ethiopian Petroleum Supply Enterprise (EPSE) for the purchase of 1.3 million metric tons of fuel to be delivered from January-December 2017.

EPSE agreed to buy one million metric tons of (gas oil) diesel and 320,000 metric tons of gasoline (benzene) from PetroChina with an estimated cost of one billion dollars. The enterprise, which is the sole government body for the import of petroleum products, buys fuel through an open international tender.

It is for the first time when PetroChina won the tender. For the past two consecutive years Vitol Oil, the Bahrain-based oil trader won the bids and supplied the nation with fuel.

Executives of EPSE and PetroChina signed the agreement on Thursday in Addis Ababa. During the signing ceremony Tadesse Hailemariam, CEO of EPSE, said that PetroChina has offered very attractive technical and financial proposals. “PetroChina is a reputable company in the global oil industry. We are happy to work with them,” Tadesse said.

Eight international oil trading companies including Vitol Oil, Trafigura and PetroChina participated in the tender. One company was disqualified for submitting both the technical and financial proposals together. The technical proposals submitted by the seven companies were evaluated and were invited to the financial evaluation.

“We were satisfied with the technical proposal of PetroChina. When it comes to the financial proposal they offered us very good prices,” Tadesse told The Reporter.

Tadesse said that in the future EPSE is contemplating to discuss joint investment projects with PetroChina. “We want to go further beyond fuel supply with PetroChina.”

Daniel Kalumba, representative of PetroChia, said that his company has held discussions with EPSE for the last three years but this is for the first time that the company has been awarded the contract. “We were eager to participate in the bid and offer competitive price, Kalumba said.

Kalumba said PetroChina is one of the top ten leading oil companies in the world with an annual turnover of 400 billion dollars. “We want to further take our cooperation with EPSE to joint investment projects.” However, Kalumba said it was too early to talk about the planned joint investment projects.

Kalumba said the tender process was very transparent. “There is no under table negotiation. Everything is clear and very transparent. I want to assure you that we will deliver the petroleum products on time.”

PetroChina will source the diesel and benzene from Yanbu Refinery in Saudi Arabia. “We also have other options in the United Arab Emirates (UAE) or China. We see the options,” Kalumba said.

Established in 1999 PetroChina Limited Company is the largest oil producer and distributer in China. It is also one of the largest oil companies in the world listed in the New York and Asian stock exchanges. Eighty five percent of the shares are owned by the Chinese government.

Ethiopia annually imports three million metric tons of fuel worth 2.8 billion dollars. Last year the country consumed 288,000 MT of benzene, two million MT of diesel and 710,000 MT of jet fuel (kerosene).

EPSE buys 100 percent of the country’s jet fuel consumption, 800,000 MT and 60 percent of diesel 1.2 million MT from Kuwait. The state-owned Kuwait Petroleum Corporation (KPC) supplies the two products directly from Kuwait using its own fuel tanker vessels. Sudan supplies Ethiopia’s 85 percent benzene consumption. 

Hence, EPSE buys 40 percent of the diesel and 15 percent of the benzene consumption from international oil trading firms through an international open tender process.

However, since Sudan will shut down its refineries for maintenance work EPSE is going to buy the benzene from PetroChina in 2017.