‘Around $64,000 million will be spent between now and 2020,’ said Kuwait Petroleum Corporation (KPC) deputy chairman and chief executive officer Hani Hussain at the third MEED Major Project Opportunities in Kuwait conference in Kuwait City on 15 May.
‘The lion’s share, $26,000 million, will be invested upstream domestically as we aim to reach our 2020 goal of 4 million barrels a day (b/d) of crude production capacity, while $17,000 million will be invested downstream.’
As for the remainder, $8,000 million will be spent in the local petrochemical industry, $7,000 million on international downstream schemes, including a planned integrated refinery and petrochemical complex in southern China, $4,000 million on upstream opportunities overseas through Kuwait Foreign Petroleum Company (Kufpec), and $2,000 million on acquiring new crude carriers.
‘Our petrochemical sector was late in developing, so we have to catch up fast,’ said Hussain. ‘Our strategy also calls for achieving a minimum production rate of 100 million barrels of oil equivalent by 2010 outside Kuwait, and we are looking at new opportunities in growth markets, especially China and India.’
The main obstacle to achieving these development goals are the growing capacity restraints on contractor and labour resources, according to Hussain.The same concerns were echoed by the chairmen and managing directors of Kuwait Oil Company (KOC) and Kuwait National Petroleum Company (KNPC), Farouk al-Zanki and Sami al-Rashaid, during their presentations.
‘This is our biggest challenge, and probably the biggest challenge facing the oil sector in the region,’ said Hussain. ‘Attracting contractors and the proper manpower is difficult. The key for us is to have proper preparation and we have to spend enough time and money in preparation.
‘We also need to have enough flexibility to understand that our relationship with contractors is a partnership, rather than a contractor doing a project for a client. We also have to ensure that no-one is hurt by rising material costs.’
Another KPC goal is the privatisation or part-privatisation of some of its non-core subsidiaries including Kufpec, its fertiliser plants and tanker fleet. ‘Our privatisation programme has been approved by the authorities and spreads across several sectors,’ said Hussain. ‘We’ve taken steps to sell off the third [and last] batch of petrol filling stations; we have started steps to sell a 30 per cent stake in Kufpec; we plan to sell 60-70 per cent stakes in our fertiliser and polypropylene plants; 100 per cent of the marine agency; 76 per cent of our tanker fleet operations; and 76 per cent of the LPG [liquefied petroleum gas] filling plant.’
Hussain would not be drawn on the ongoing dispute over the state’s official proven oil reserves. ‘I cannot talk about that here, plus it’s a very complex and sensitive subject,’ he said. ‘It’s better to delay talking about this until we have formulated a response.’