Kenya Renews Accord to Buy Iranian Crude, Plans No Shipments

Kenya renewed a memorandum of understanding to buy crude oil from Iran, though the East African nation hasn’t committed to receive any shipments, Energy Ministry Permanent Secretary Patrick Nyoike said.

Kenya signed its latest agreement with the Persian Gulf supplier in June, Nyoike said in a telephone interview today from the capital, Nairobi.

“We signed MOUs in 2009 and 2010 and nothing happened,” he said. “We signed another one last month with Iran, but it has no legal substance and we can decide to do it or not,” Nyoike said. He declined to provide further details.

Iran, the second-biggest OPEC producer after Saudi Arabia, is looking for new markets after the European Union embargoed purchases of crude from the Islamic Republic starting July 1. The ban is the latest in a series of trade and financial sanctions that the U.S., European Union and United Nations have imposed on Iran over its nuclear program.

The U.S. is urging other countries to reduce their trade with Iran in order to cut revenues that could further the country’s nuclear plan, the State Department said in a statement e-mailed by the U.S. embassy in Kenya.

“In our discussions with all of our international partners we have made it clear the importance of reducing both ties with the Central Bank of Iran and revenue to Iran in order to prevent Iran from acquiring a nuclear weapon,” it said.

Kenya Petroleum Refineries Ltd., owned by Essar Energy Plc (ESSR) and government, may begin this month buying its own crude and selling products directly to fuel marketers.

Kenya announced plans last year to end the Mombasa-based refinery’s tolling arrangements, under which fuel retailers were required to supply a specific amount of crude each year for the refiner to process at a fee. The changes will enable KPRL to continue processing Murban crude and also start handling oil from “cheaper sources,” the company said last month.

Of the 1.7 million metric tons of oil that KPRL refined in 2011, 99.7 percent was Murban crude, according to data compiled by the Nairobi-based Petroleum Institute of East Africa.

To contact the reporter on this story: Sarah McGregor in Nairobi at smcgregor5@bloomberg.net

To contact the editor responsible for this story: Andrew J. Barden at barden@bloomberg.net.

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