Industrial equipment for Kuwait’s critical assets

Kuwait

Bashir Shafout, general manager of Global Tawreed, talks to The Energy Year about the complexities of supplying equipment to critical oil and gas operations and the challenge of finding land in Kuwait to build a manufacturing facility. Global Tawreed is an engineering supply company that caters to the oil and gas, petrochemicals and power sectors.

How have your operations evolved in recent years?
Since our establishment in 2000, our core business has been supplying industrial materials and equipment to EPCs, the K-companies and the government and industrial sectors. We intentionally avoided venturing into construction due to the risks associated with that segment due to delays in contract awards, project cancellations and payment delays. Our primary focus is the oil and gas and power sectors, with around 35-40% of our current portfolio dedicated to them.
Our trading business has been successful and our team has been expanding steadily, and we have recently implemented an ERP [enterprise resource planning] system to optimise our processes and accelerate our activities.
Following the financial crisis in 2008, we recognised the need to expand beyond trading and into services because, even though Kuwait is a major oil producer, we found a lack of suitable workshops in the country for repair services and packaging. This led us to our current venture into manufacturing and our plans to establish a fabrication workshop.
We are in the process of securing land, preferably around 10,000 square metres in Mina Abdullah, near the Joint Operations and key entities such as KOC and KNPC. While land is available for purchase or rent, the costs are high and we are concerned about unsustainable overheads. Also, the bureaucratic process for land allocations is slow and possibly influenced by political factors.

What options are you exploring to overcome the obstacle of high land costs?
In 2023, we had revenues of KWD 8 million [USD 26 million] and our plans remain focused on securing land. The decision between purchasing or renting land is critical for our next steps, but both options come with significant costs. We recently came across a 10,000-square-metre plot priced at KWD 4 million [USD 13 million], which is too expensive, and yearly rents range between KWD 50 and 60 [USD 163 and 195] per square metre. Determining the most viable option remains a top priority for us.

What do you look for in your partnerships with manufacturers and contractors?
We represent a diverse array of international manufacturers from Europe and the US and, more recently, China, South Korea and India. We have established strong relationships with them and become a trusted supplier for our clientele, which primarily consists of domestic and international EPC contractors.
For the MEWRE [Ministry of Electricity & Water & Renewable Energy] and companies such as KOC and KNPC, our role primarily involves supplying equipment and spare parts and providing maintenance and revalidation services for their critical assets. We also handle installations, ensuring the seamless integration of new equipment into their operations.

How do you prioritise equipment categories and what market strategies do you employ?
We aim to lead the market in all equipment categories. However, being number one is not just about the quality of the products we supply; we must also consider our ability to adapt to project requirements and our pricing strategy. Unlike some competitors, we are willing to adjust our prices to secure projects, even if it means operating at the breakeven point or with minimal margins in the short term.
Our advantage lies in our comprehensive maintenance services and supply of spare parts. While the margin on spare parts may be thin, being the authorised agent for this equipment ensures us a steady revenue stream, as entities like KOC inevitably return to us for their spare part needs. Whether supplying directly to KOC or through contractors, we are committed to providing value and building long-term relationships with our clients.

What challenges and opportunities are you encountering in your projects, especially regarding equipment procurement?
In KOC’s GC-16 [Gathering Centre-16] project, which was awarded to one of the major contractors, we provided nearly 90% of the equipment, for a total value of approximately EUR 44 million. However, with SPETCO in JPF-4 [Joint Production Facility-4], the nature of the project was significantly different because it was a BOT [build-operate-transfer] scheme. Since SPETCO is not on KOC’s approved vendor list, they had to procure their equipment from a company working on JPF-5, namely the Jereh group, based in China. We supplied some items directly, but they obtained most of the equipment from Jereh.
Currently, several projects in the country are in limbo. The bidding process has closed, but awards have not yet been finalised. Projects linked to the Al Zour refinery and many others remain in a state of uncertainty. However, several mega-projects from the MEWRE and the K-companies are under way where we can potentially cover almost 70% of the necessary equipment.

Are you currently involved in any renewables projects?
We are collaborating with several developers on solar projects. In our search for suitable technology, we have identified a promising option from a partner in the Netherlands. We are particularly interested in technology like the so-called “sunflower,” which tracks the sun’s movement to optimise space utilisation and maximise production.
Naturally, we are mindful of the project’s operational and capital expenditures. We are currently in discussions with our principal in the Netherlands to develop a proposal, and forming a consortium for financing and co-ordinating activities remains a key focus.

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