French oil firm Rubis Energy has suspended the supply of aviation fuel to Kenyan airlines reducing its overall sales volumes in Africa by 7% in the third quarter.
During a trading update, the company stated that the action was a part of restructuring its aviation contracts in the nation to reduce costs without affecting its profits.
Rubis Energie Kenya, the French company’s local subsidiary, is one of the country’s largest suppliers of aviation fuel.
It is uncertain if the firm’s choice was influenced by the recent spike in fuel costs that occurred since the outbreak of the conflict between Russia and Ukraine in February, which has imposed significant costs on the oil industry.
In Q3 in Africa, Rubis sold 573,000 cubic metres of its goods, including fuel, liquefied petroleum gas (LPG), and bitumen, down from 619,000 cubic metres in the same quarter last year.
“Most of the regional volumes decline (five percent) was due to optimization of the aviation contracts in Kenya to improve the margins and with no dilutive impact on gross profit,” said Rubis.
This is despite a rebound in the aviation sector caused by the lifting of COVID-19 travel restrictions, which increased demand for aviation fuel by 20% in the first half of the year.
According to data from the Energy and Petroleum Regulatory Authority (Epra), commercial aircraft and helicopters used 361.69 million litres of fuel in the six months leading up to June, up from 298.96 million litres during the same time last year.
Rubis says that its East African companies are on an expansion binge aimed at the petroleum retail industry. The company claims that its strategy has already started to pay off because regional subsidiaries have noticed a 25% rise in quantities sold at service stations.
Due to the substantial rise in LPG usage in the area, Rubis, the owner of the well-known K-Gas brand, is considering increasing its investment in LPG sales.
The company is also counting on the region’s growing demand for significant infrastructure improvements, particularly in the area of road building, to drive up bitumen sales.
“In the mid-and long-term, the Group set to leverage on numerous growth drivers in Africa (which has) a growing population and growing energy demand,” said the firm.
“Rubis set to benefit from portfolio improvement in Eastern Africa, exposure to bitumen given the long-term need for the infrastructure development, as well as a solid position in LPG business which is seen as a transitional energy in the continent.”
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