TOGY talks to
Backbone of the economyJune 13, 2017
TOGY talks to Wafaa’ Al Zaabi, managing director for planning and finance at Kuwait Petroleum Corporation (KPC), about the company’s efforts toward developing local businesses and skilled labour in the domestic oil and gas industry. KPC is Kuwait’s central national oil company.
KPC was established in 1980, as a state-owned holding company for the various government-owned oil and gas entities. Over the 30 years since its creation, KPC has developed into a supervisory and controlling body for the industry, focused on developing and enhancing oil and gas reserves, improving the country’s downstream capacity and optimising the investment into the sector and returns on investment. In partnership with the Ministry of Oil and the Supreme Petroleum Council, KPC also decides on the strategic direction of its 10 subsidiaries. When the Kuwaiti government sets a target of increasing production by more than 1 million bopd, it is the responsibility of KPC and its subsidiaries to see it through.
• On private opportunities: “Partnership opportunities will see utilities and other future projects offered to the private sector. So far, we have identified 10 projects in this category: the retail fuel business for entrepreneurs, three projects in refining and the remaining six projects in petrochemicals. We plan to offer a share in the Olefin III and Aromatics II projects, which are currently in the design stage, to the local private sector.”
• On CPAC: “Some of CPAC’s key achievements have been relaxing prequalification conditions for local manufacturers and contractors; unifying contractor performance report forms between KNPC, KOC and PIC; encouraging joint ventures with international manufacturers and contractors; and publishing statistics on fast-moving materials to create opportunities for investors.”
Wafaa’ Al Zaabi also discussed initiatives to balance labour supply and demand in Kuwait. Most TOGY interviews are published exclusively on our business intelligence platform TOGYiN, but you can find the full interview with Wafaa’ Al Zaabi below.
What are the primary strengths and weaknesses of Kuwaiti companies in the oil and gas industry?
Kuwaiti companies have a strong knowledge of the local business environment and our operations. Their long-term relationships and co-operation with K-companies are also important. However, local companies are risk-averse, and thus do not develop their industrial arms with the same strength as their trading businesses. Moreover, the local private sector still needs to work more on acquiring some technologies required by the oil and gas industry.
What are the main objectives of KPC’s Local Content Strategy and Private Sector Participation (PSP) Programme?
The KPC Local Content Strategy is the umbrella under which all KPC contributions to developing the local economy fall, including the development of private-sector participation.
The main objectives of KPC’s local content programme are facilitating collaboration between local industry and government on local content requirements, maximising in-country spend and fostering knowledge transfer to the local private sector. Other important points are the development of a national workforce in the private sector, supporting local industrialisation opportunities and encouraging partnerships with the local private sector.
How is KPC promoting the participation of local private-sector companies in Kuwait’s energy industry, and which KPC projects offer opportunities to these companies?
KPC is promoting the participation of local private-sector companies in Kuwait’s energy industry in two primary ways. First, by maximising in-country spend in its operations and projects, spending locally. In this regard, KPC has taken a proactive role and has completed the implementation of local content initiatives that aim to increase local spending.
Secondly, KPC seeks to promote the development of local industry by facilitating or offering industrial opportunities to the local private sector in three main categories: partnerships, forward linkage and backward linkage opportunities.
Partnership opportunities will see utilities and other future projects offered to the private sector. So far, we have identified 10 projects in this category: the retail fuel business for entrepreneurs, three projects in refining and the remaining six projects in petrochemicals. We plan to offer a share in the Olefin III and Aromatics II projects, which are currently in the design stage, to the local private sector.
Forward-linkage opportunities are when feedstock from KPC refining and petrochemical operations will be made available for further downstream processing. We have developed 10 projects in this category so far, including fluid catalytic cracking distillate into aromatics production, kerosene into linear alkylbenzene production, carbon dioxide, polypropylene film and sheet, and polypropylene raffia.
Backward-linkage opportunities are when the local private sector builds up capacity to offer products or services to KPC. Some of the seven projects we have established so far are: encouraging further localisation for part of the pipeline and flowline value chain, facilitating co-operation between local well operations service providers and international technology providers, encouraging expansion of product portfolios and development of chemicals blending capabilities, and localisation of specialised non-critical maintenance jobs.
What have been the main activities of the Consolidated Partnership Advisory Council (CPAC)?
CPAC is a high-level advisory council of local oil companies, government and industries. It provides a platform for collaboration between the oil and gas industry and local vendors and suppliers.
Some of CPAC’s key achievements have been relaxing prequalification conditions for local manufacturers and contractors; unifying contractor performance report forms between KNPC, KOC and PIC; encouraging joint ventures with international manufacturers and contractors; and publishing statistics on fast-moving materials to create opportunities for investors.
CPAC also identifies materials manufactured locally that can be used in the oil and gas industry, holds seminars to promote alliances among local companies so that they may undertake major projects; and publishes future projects in the domestic oil and gas industry on the KNPC website via the SSC Newsletter.
What are some of the challenges and opportunities that come with balancing the supply and demand of skilled labour in Kuwait?
As part of KPC’s National Workforce in the Private Sector Development Initiative – which is part of the KPC local content programme – the Local Private Sector Workforce Development Roadmap was established. To create the roadmap, the future supply and demand of skilled workers in Kuwait was studied and gaps were identified. One of the key opportunities was the availability of university-level Kuwaitis required by the industry.
However, limited availability of skilled vocational school graduates was identified in some categories. Moreover, the preference for rewarding government jobs still poses a great challenge to recruitment efforts by the private sector. Nevertheless, this KPC initiative seeks to capitalise on opportunities found during the supply and demand study and mitigate gaps through co-operation with the local private sector active in the oil and gas industry.
How can Kuwait strengthen the financial capability of local SMEs?
SMEs form the backbone of any global economy and at KPC we co-operate with the Kuwait National Fund (KNF) for the development of local SMEs. This work stems from the fact that, as per the terms of their establishment, KNF offers easy-term loans to local entrepreneurs and provides them with all needed support.
We recently signed a memorandum of understanding with KNF to study the feasibility of franchising KNPC’s [Kuwait National Petroleum Company’s] 43 fuel stations to local entrepreneurs who will operate and maintain them. We were also involved with KNF in setting up a process for the shortlisting of SME projects and selection of entrepreneurs for future projects.
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