Current Issue 52
Establishing itself firmly in the African oil industry, United Petroleum is paving the way for clean products
Keeping Africa Clean
Project Manager:Josh Hyland
As a subsidiary of the Bakhresa Group, nine-year-old United Petroleum is making a rapid ascent through the ranks of East Africa’s oil & gas industry.
The Bakhresa Group, currently present across nine African countries, brings a high level of experience and expertise to United Petroleum; and in a market which is consistently volatile, this is proving to be helpful to the Company’s growth.
United Petroleum was established in an environment which has undergone vast changes and will continue to do so. And despite the many downfalls that are inevitable with circumstances such as this, it has emerged as a Company at ease with evolving.
In its simplest form, the original premise of United Petroleum was to fuel ships both on land and offshore. Collins Chemngorem, Chief Executive Officer of United Petroleum explains: “We began completely from scratch as a small start-up Company with a depot in Zanzibar leased from the Government. As the Company grew, we decided the smart move would be to branch into the retail business. Not only did this prove to be more interesting but also provided us with room for growth. At this point we decided to put other propositions aside and collectively focus our efforts.”
With United Petroleum’s ethos of expansion and growth, the Company is looking to reach out to the mainland and this process has already begun with the Group’s move to mainland Dar es Salaam, in order to begin the same processes that have brought such high levels of success in the past.
Evolve in the market
United Petroleum set up its operations in Zanzibar at a time when the market was liberalised. The Government in Zanzibar was regulating the industry through the Ministry of Finance; therefore the power to make decisions and regulate the industry stood with the Minister of Finance. The recent introduction of a new regulatory system - Zanzibar Utilities Regulatory Authority - ensures that the whole system which could previously fail Oil companies due to conflict of interest from centrally controlled regulation by Ministry of Finance, is completely removed of bias.
“It was difficult in the early days in terms of regulations. There would often be times when a clear conflict of interest would appear for the Minister and it was almost impossible for them to distinguish between the Ministerial duties and regulatory duties which would often create clashes,” recalls Chemngorem.
The enactment of the current regulatory system last year means that the industry is now regulated by the correct factors, such as product quality, product deliveries, scheduling and pricing; all of which make it easier for companies such as United Petroleum to evolve in the market.
Zanzibar has the ability to play by its own rules, as it is semi autonomous with its own Government and President. It provides an opportunity for companies like United Petroleum to take advantage of the independence that Zanzibar is privy to when sourcing products, enabling it to move cargos from ship to ship operations offshore, or Tanzania Mainland and Mombasa in Kenya.
“As we have the ability to work within Tanzania and Kenya, we are operating within the two bigger markets on the East African coast which have ports to receive our products; meaning we keep our activities to one controlled procurement system,” adds Chemngorem. “Our Marine Tanker also gives us the flexibility to constantly source for cleaner products as well as chartering it to other players in the region.”
Market leaders in delivering clean products
As one leg of the Bakhrasa Group of companies, United Petroleum is unified by a shared vision within Tanzania in developing a name for itself through the delivery of quality products.
Chemngorem emphasises: “At United Petroleum we work with the aspiration to ensure that the products we are putting into the market are of the highest quality. One of the main contributors to our market leader status in Zanzibar is due to the fact that we realised early that the market was very responsive to clean products for example.”
The realisation that there was a highly lucrative hole in the market to tap into has enabled United Petroleum to provide very high quality, clean diesel for its customers. Not only was the market very responsive to United Petroleum’s clean Ultra Low Sulphur 7ppm diesel, but also highly appreciative of the product and the difference it will make to the industry. This has enabled United Petroleum to establish 20 retail stations in Zanzibar with plans to develop seven new stations every year in mainland Tanzania.
“This new venture has really placed us at the forefront of the market. Customers know that our products are exceptionally clean and that we are a quality-driven Company. Within a very short space of time, we have managed to hone the process which, in turn, has enabled us to assert ourselves successfully on the rest of the market,” continues Chemngorem.
It is commonly acknowledged that obtaining positive reviews as an oil company is no mean feat; however, United Petroleum continues to receive rave reviews for its work and will look to leverage this positive reputation long into the future.
“We want to combine all of our work up to this point and build on it in the mainland, supplying good products and constantly innovating new cleaner energy and a world-class service which is what will set us apart from all the other players in the industry. I think that by constantly monitoring what is happening in the market, we are far more proactive than reactive with discovering opportunities,” concludes Chemngorem.