The emir of Kuwait, Sheikh Sabah al-Ahmad al-Sabah al-Jaber, has officially approved a new Supreme Petroleum Council (SPC), paving the way for tenders on a series of major new projects.
The 12-member council is the highest decision-making body in Kuwait’s oil and gas sector. The previous SPC was disbanded in March when the country’s National Assembly (parliament) was dissolved as a result of growing tensions between legislature and the executive (MEED 20:3:2009).
The emir passed an official decree calling for the formation of the council on Wednesday 3 February, a source close to the government tells MEED. The new SPC will be announced in the official government gazette on 8 February, according to a senior industry executive.
The government had been expected to announce a new SPC in May 2009 after parliamentary elections, but struggled to find qualified candidates who were willing to take seats on the council. Four members have been changed from group which was dissolved in March, both sources say, although the exact membership is yet to be announced.
SPC approval is required for any policy or legislative decision made by the country’s oil ministry, any major personnel changes at state energy company Kuwait Petroleum Corporation (KPC), the award of major contracts, the auditing of KPC and its subsidiaries, and for the establishment of new companies, takeovers, or mergers.
In recent years however, the SPC has become increasingly involved in the country’s political process, and was at the centre of the collapse of two high-profile deals in 2008 and 2009 under intense pressure from nationalist members of parliament.
In December 2008, the SPC cancelled a $17.4bn joint venture, K-Dow, between state petrochemicals producer Petrochemical Industries Company (PIC) and the US’ Dow Chemical. The US major is currently pursuing compensation of up to $3.5bn as a result of the cancellation (MEED 19:1:2009).
In March 2009, the council cancelled contracts awarded in May 2008 for the construction of an estimated $15bn new refinery at Al-Zour (MEED 16:3:2009).
The new SPC will be required to make decisions on a series of controversial issues including the a re-tender of the Al-Zour refinery project and a multi-billion dollar scheme to involve international oil companies (IOCs) in the development of key oilfields in the north of the country known as Project Kuwait.
The SPC is traditionally chaired by the country’s prime minister, in this case Sheikh Nasser Mohamed al-Sabah. Council members also usually include Kuwait’s ministers of oil, finance, and trade and development alongside the governor of the Central Bank of Kuwait.