Energy firms need help from Kuwaiti government

25 September 2009

Kuwait Petroleum Corporation has been thwarted at almost every turn by the country’s political infighting

With a malfunctioning political system, constantly changing ministers and an increasingly overweight public sector, it is little surprise that Kuwait has problems planning for the future.

How, one senior government source asks, can civil servants push through plans laid down by one secretary of state when another will soon be on his way with new ideas?

This question cannot be asked of state energy giant Kuwait Petroleum Corporation (KPC), which has a stable management team made up of some of the country’s brightest and most talented technocrats, managers and engineers.

Over the past two decades, KPC subsidiaries Kuwait Oil Company and Kuwait National Petroleum Company (KNPC) have developed wide-reaching plans to exploit, process and distribute new reservoirs of oil and gas while getting the most out of existing resources.

Yet their plans have been thwarted at almost every turn by the country’s political infighting and a frustrating lack of support from the highest authorities in government.

High-profile projects such as the $700m expansion of the Mina al-Ahmadi refinery have suffered from a lack of governmental resolve. KNPC is now retendering the Al-Ahmadi contract two years after it first awarded the contract. South Korea’s SK Engineering & Construction has been stripped of the contract and, under Kuwaiti law, banned from taking part in the retender.

In March, parliamentary infighting also led KNPC to cancel its most important project – the $15bn construction of a refinery at Al-Zour.

KPC has plans in place that could make the country one of the most efficient, clean and profitable oil and gas producers in the world. But if the government, parliament and new Supreme Petroleum Council, which will be appointed in October, do not make the effort, its plans will come to nothing.

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