A drive for increased production in Kuwait

Kuwait

Tareq Qaddumi, CEO of SPETCO, talks to The Energy Year about the company’s contribution to KOC’s production increase drive and challenges in regional expansion for Kuwaiti companies. SPETCO is a total solutions provider to the oil and gas sector with a proven ability to resolve complex problems across the value chain from upstream to midstream production and process requirements.

How has SPETCO been contributing in recent years to KOC’s production increase drive?
A significant milestone was the completion and commissioning of the JPF-3 [Jurassic Production Facility] in 2019. It has the capacity to process 40 barrels of stock tank oil per day, 104 mcf of gas and 200 tonnes per day of molten sulphur and was subsequently upgraded to produce up to 50,000 bopd. This increase in production capacity has contributed greatly to KOC’s production increase drive.
Concurrently, our well testing contracts were also renewed in 2021, and we have just recently signed a new contract for sucker rod pumping (SRP) services. Both of these contracts are handled by our Upstream Services Division. The biggest news for us was being awarded the USD 378-million JPF-4 project in December 2021.

Which are the key challenges in the JPF-4 project?
The JPF-4 will be a fast-tracked project – KOC wants us to complete it in 26 months. The good thing about the JPF-4 is that it is similar to JPF-3 and, given our experience in completing a couple of production facilities prior to that (EPF [Early Production Facility] 50 and GSF [Gas Sweetening Facility]), will enable us to improve our quality and standards. We hope to complete the project ahead of schedule.
We faced quite a few challenges on the JPR-3 that we expect to face with the JPF-4 as well. Prior to commissioning, the challenges are always the lead time with the vendors, and how we’re going to get everything in place at the same time. That, in particular, is one of the biggest difficulties. I would say that another challenge for the JPA-4 was the financing, but that was finally resolved through a syndicated financing deal with multiple banks.

What role does SPETCO want to play in the upcoming projects aimed at increasing oil and gas production in Kuwait?
I think we’ve strategically placed ourselves in a position where we’d be able to participate in several tenders. Our bread and butter to this day is the upstream services segment, which consists of our well testing and artificial lift business lines. We do want to take on other projects, but I think upstream is what we do best.
On the midstream, we will always be major players within that segment. But we’re excited to be part of Kuwait’s upstream vision and ensure our contribution to it by bidding for more similar production facilities projects.
With our existing contracts, we always like to pitch for expansions. Whether there are bigger contracts coming up or not, we always like to go to the client and say “we’ve executed this for this amount and this type of production. What if we propose an idea where we can add to that production?”
For example, maybe we pitch an expansion to the JPF-3. We did it with the GSF project [gas sweetening facility] and that kind of gave us the confidence to say, “they’re open to that.” I think for the JPF-3, come 2023, we’d like to see an expansion happen there. And we would like to also do the same for the JPF-4.
Right now, JPF-3 is at 50,000 bopd. If we could upgrade and bring it up to 80,000 bopd, it will contribute immensely to the drive to increase production by KPC and KOC.

How has your geographical expansion strategy evolved in recent years?
We do have some projects in Abu Dhabi that have picked up with ADNOC. The progress for us there was slow for a long time, but last year we got a contract for our patented Hollow Bit Slot Recovery Services with our OEM partner Western Drilling Tools Inc. from Canada. This patented technology would ensure large-scale commercial benefits to ADNOC and us.
Simultaneously, we’ve also been trying to get established in Saudi Arabia and Oman. Oman has shown a lot of interest in production facilities, midstream mainly. Tenders for such projects are in the pipeline, and we want to be there to bid on these tenders. The same goes for Saudi Arabia. We mainly want to get into the midstream segment in both of these countries.

What are the key regional expansion challenges for Kuwaiti companies like SPETCO?
One challenge is finding the right partner. It’s easy to say, “expansion is part of our strategy.” However, when you’re actually on ground in foreign territory, it’s not easy at all, because you have to put full trust in partners who are on board with the same vision and who have an efficient operation on the ground.
It is vital for a good partner to be financially stable. Obviously, liquidity is important, and they would have to know the business. If we were to go into business or pursue a midstream project in a place like Oman, we want to be with a partner who has experience in that. It’s one thing to be in the oil and gas industry, but if you partner up with someone who’s strong in upstream but has no experience in midstream, it’s not going to help. Synergy is important.

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