National Oil is state corporation under the Ministry of Energy incorporated in April 1981 and charged with participation in all aspects of the petroleum industry. National Oil has a 100% Government of Kenya shareholding. National Oil became operational in 1984 and its initial operations were limited to exploration activities delegated from the Ministry of Energy. In 1988, National Oil went downstream and actively started participating in the importation and sale of petroleum products including crude oil, white fuels, lubricants and LPG.
The formation of National Oil was precipitated by the oil crisis of the 1970's (1973/74 and 1979/80) and the correspondent supply disruptions and price hikes which resulted in the country's oil bill comprising of almost one third of the total value of imports and therefore making petroleum the largest single drain of Kenya's foreign exchange earnings.
National Oil was therefore born out a need by the Government of Kenya to have greater control of the petroleum sector which is a crucial determinant of the country's economic performance. National Oil has since remained the Government's policy instrument in matters related to oil specifically in the upstream exploration of oil and gas, mid-stream development of petroleum infrastructure and downstream marketing of petroleum products including motor and industrial fuels, lubricants, LPG and related motor consumables and hardware.