Kenya’s National Oil Corporation (NOCK) and Algeria’s state-owned energy giant Sonatrach SPA have agreed to collaborate across the petroleum value chain, including upstream exploration and production, LPG imports, storage, distribution and trading.

A Memorandum of Understanding, signed on September 8 at the Algerian company’s headquarters in Algiers, also covers staff training, knowledge transfer and the development of strategic reserves, Sonatrach said in a press release.

“This collaboration comes at a pivotal moment as we are geared towards expanding Kenya’s oil and gas capacity,” NOCK CEO Leparan ole Morintat is quoted by the Daily Nation as saying at the signing ceremony. “Working with Sonatrach will give NOC access to petroleum expertise, infrastructure and trading experience to help transform Kenya’s energy sector.”

The MoU was concluded as part of the implementation of an earlier one between the Algerian and Kenyan governments aimed at promoting bilateral cooperation in the oil, gas, and energy sectors.

Apart from cooperation in hydrocarbon exploration and production, it focuses on the opportunity to supply Kenya with LPG and oil products, “as well as the feasibility of developing a commercial LPG oil products, lubricants and petrochemicals”  and “provides for examining the feasibility of developing LPG distribution mechanisms as a fuel for motor vehicles and households”, Sonatrach said in a press release.

The MoU comes as Kenya seeks to stabilise fuel supply, attract investment and strengthen its position as a regional energy hub.

According to Kenya’s Energy and Petroleum Regulatory Authority (EPRA), the East African country imported 360,594 tonnes of LPG in 2023, up 8% from the previous year, while total petroleum product imports reached 4.3mn tonnes, costing KES626.4bn ($4.6bn).

Access to Sonatrach’s supply networks and trading platforms could help secure competitive LPG imports, reduce exposure to global price shocks and support reforms such as new exploration licences and the Open Tender System for LPG.

Sonatrach is Algeria’s largest energy company, with more than 150 subsidiaries and accounting for over 90% of government export revenue. The partnership could attract capital inflows into Kenya’s oil exploration, midstream infrastructure and downstream distribution.

Meanwhile, Kenya is expanding domestic LPG infrastructure. As bne IntelliNews reported, Energy and Petroleum Cabinet Secretary Opiyo Wandayi recently endorsed a KES8bn ($61.8mn) LPG storage facility in Vipingo, Kilifi County, dismissing safety and regulatory concerns raised by local officials and environmentalists. The project, developed by Tanzania-based Lake Gas Ltd, received its first shipment of 12,000 tonnes of LPG, marking the start of operations.