• The root of the dispute is the political appointment of new members to the board of Kuwait Petroleum Corporation
  • All projects that are yet to enter the execution phase could stall if the dispute continues
  • The $14bn Al-Zour New Refinery Project is among the schemes that could be affected
  • Some projects are already delayed as a result of the dispute

Kuwait’s Oil Minister Ali al-Omair and the CEO of Kuwait Petroleum Corporation (KPC), Nizar Mohammad al-Adsani, are refusing to meet with each other on any issue in a development that could paralyse oil and gas projects in the country.

Sources say that if the two officials refuse to cooperate then all of Kuwait’s oil and gas schemes that are yet to enter the execution phase will come to a standstill.

“If the CEO of KPC and the oil minister continue to refuse to be in the same room, everything will stop,” says one senior industry source.

The dispute is understood to focus on efforts by the Oil Ministry to appoint new members to KPC’s board.

Al-Adsani has said the ministry does not have the legal power to make appointments.

If the dispute continues, all projects that are being tendered or are the subject of studies will stall as they fail to obtain necessary approvals, according to industry sources.

This includes the Al-Zour New Refinery Project (NRP), which is due to see packages worth $10bn-$14bn awarded this year.

“Cooperation between these two figures is essential to seeing projects progress,” says one source.

“If there are no clear signals from the top then other officials working for the ministry and government-owned oil companies will hold back from making decisions.”

When an evaluation is completed or a tender is being prepared, approval for the next phase of the project needs to be granted by the KPC board, which requires the participation of the oil minister – who is also the chairman of KPC – as well KPC’s CEO, Al-Adsani.

Industry sources say projects are already seeing the effects of the dispute between Al-Omair and Al-Adsani.

“Officials are sitting on their hands and delays are stacking up,” says one source.

Another source says the severity of the situation could lead to more senior Kuwaiti figures stepping in to try and resolve the dispute.

“Both figures are very well connected and they are drawing upon all of their resources,” says the source. “We are expecting higher powers to step in and resolve the situation. It is really inconceivable that this will be allowed to continue.”

Although the dispute is expected to have wide-ranging ramifications for oil and gas projects in Kuwait, schemes that are already under execution, such as the $16bn Clean Fuels Project (CFP), are expected to continue to see progress.

KPC has not responded to MEED inquiries about the nature of the dispute between Al-Adsani and Kuwait’s oil ministry.

KPC is a government-owned holding company and has eight subsidiaries, including upstream operator Kuwait Oil Company (KOC) and downstream operator Kuwait National Petroleum Corporation (KNPC).

GCC Projects Market Report 2015

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The outlook for the projects market in the GCC is uncertain. Oil prices have fallen by half since June 2014, putting increased pressure on government finances. This has led to a review of spending priorities across all the GCC markets.

As a consequence there is huge uncertainty for any businesses operating in the regional projects market.

MEED’s GCC Projects Market Report 2015 provides clarity on the outlook for projects and helps you to understand the drivers of projects spending activity in each of the GCC markets.

The report provides a comprehensive snapshot of the GCC projects market, helping you position your company for the upcoming opportunities and mitigating risk and challenges in the coming months. 

GCC Projects Market Report 2015 provides:

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  2. Top Contractor and Client Activity Review: Increase your market share by gaining insight into the industry leaders by sector and their current and planned project activity
  3. Market and sector-based executive summaries: Plan your business development strategy by gaining an immediate insight on the market
  4. Government Policy and Strategic Priority: Mitigate risk and identify challenges by understanding the major drivers behind the plans

The report focuses on quantifying the size of the market and the individual sectors that comprise it, as well as supplying a forecast for the future direction of the market. It also looks at the recent changes in government in Saudi Arabia and considers how the increased security concerns will shape government spending priorities.

Stay up-to- date with regional trends and access exclusive data, research and analysis in presentation-ready tables, graphs, charts and maps.

GCC Projects Market Report 2015 report is available now and can be purchased from MEED’s new online store.

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