Innovation ups production in Kuwait’s upstream

The trajectory in the upstream is positive and rising significantly; there are large investments planned.


Innovation ups production in Kuwait’s upstream

April 24, 2024

Tareq Qaddumi, CEO of SPETCO, talks to The Energy Year about developing novel solutions for gas processing and the company’s expansion plans in Kuwait’s midstream and downstream segments. SPETCO is a Kuwaiti engineering company that supplies products and services to the hydrocarbons sector, specialising in EPC and build-own-operate-transfer projects.

Can you walk us through SPETCO’s track record and your relationship with KOC?
While working towards production in the Jurassic fields, SPETCO was the first local contractor to approach KOC with a new concept for a modular EPF [early processing facility] that introduced new technology to sweeten already sour crude and gas. The pilot, completed in 2003, produced just 5,000 bpd, but KOC put trust in us, encouraging us to bid and propose other solutions within the midstream sector.
EPF-50 followed that pilot, and then we bid for JPF-3 [Jurassic Production Facility 3], which we were able to commission. We delivered O&M [operations and maintenance] work there, as well.

What are some of SPETCO’s recent activities and current plans in the midstream?
Our latest undertaking is JPF-4, located close to the Sabriyah field in North Kuwait. The project was awarded to us in 2021, while JPF-5 went to the Jereh Group, a Chinese company from whom we procured one of our process packages for JPF-4. It was a collaborative and competitive relationship that was unique and enabled us to complement each other.
We started producing oil at JPF-4 in January 2024. It was a big moment for all of us at the company. We hit 40,000 bopd, and we managed to do it two weeks ahead of time. Now the target is 50,000 bopd.
We have realised over the years that we have been working at these types of production facilities and midstream operations that there is always room to upgrade them. We did an expansion already at a GSF [gas sweetening facility] we have in west Kuwait, and we believe KOC will trust us to complete future expansions, as well. The expectation for JPF-4 is that it will have a smooth O&M stage. The midstream is a segment that we want to increasingly focus on moving forward as we believe it to be very strategic for our operations, and it will add to the company’s overall value.


How would you assess the current domestic upstream environment and SPETCO’s business in the sector?
The trajectory in the upstream is positive and rising significantly; there are large investments planned. This will definitely impact our activities because the upstream has proven to be our bread and butter over the last decade.
We have a very good position in oilfield services as well. We’re at the forefront in well testing, where we have the largest market share in Kuwait, around 28%, and we have a strong position in SRPs [sucker rod pumps]. As of today, we have 860 SRP units deployed in the Wafra Joint Operations and KOC fields.
2023 was our most profitable year for well testing since we started offering the service in 2002. To give you an idea, every month we hit the KWD 200,000 [USD 650,000] mark, while a good month is typically between KWD 125,000-150,000 [USD 406,250-487,500]. This is a good indication of what we should focus on for oilfield services.
Demand for our well-testing services comes from KOC, with whom we have a KWD 12.2-million [USD 39.7-million] five-year contract in place until February 2026. We have also executed various contracts in the Wafra oilfield. We had contracts there until the conflict happened, and now talks of well testing and oilfield services have been postponed. A large chunk of our well-testing revenues came from the Joint Operations, and we are hoping that we will be able to work there again in 2024.
However, our biggest revenue stream comes from SRPs, a segment where we partner with the Lanzhou LS Petroleum Equipment Engineering Company, a Chinese company that is ahead of the game in pumps. It is an increasingly competitive field, but we have completed quite a few undertakings with KOC that have led to new opportunities for additional pumps and wells, which strengthens our position in artificial lifting.

Can you give us insight into your international expansion plans and strategy?
Our main business outside of Kuwait has been in the UAE, and Oman has also been on our radar. It is a country with lots of potential. We recently opened an office there and bid for a PDO [Petroleum Development Oman] tender. Plans to pursue business in Saudi Arabia are also in the pipeline.
We believe that when you want to expand across national borders, you need an established partner who, besides being financially strong and logistically capable, understands the culture and can navigate the politics, the bureaucracy and the nuances that can cause delays. What’s not talked about enough when companies expand is their partners’ ability to get things moving with the governmental entities that are also involved.
We want a partner who has experience in the field we want to penetrate. A potential partner can be a top-notch player in the upstream, but if they do not have experience in the midstream, we are less likely to partner with them because they are not accustomed to managing operations in a different field. I always look at these criteria when choosing a partner.

How prepared is SPETCO to seize opportunities arising from the domestic downstream uptick?
For the refineries, we have set up an automated fabrication facility specialising in high-quality and cost-efficient fabrication of pipes and structural steel, as well as blasting, painting and installation works. It’s a fully automated facility that we built from scratch in 2019 partnering with NAEC, a very advanced Chinese company that helped us set it up. Located in Mina Abdullah and staffed with a workforce of 150, it is capable of handling pipe sizes varying between two and 36 inches and has a production capacity of 1,250 diameter inches per shift.
We have created various pipe manifolds for our facilities, namely JPF-3 and JPF-4, and we can also offer transport, so we provide end-to-end solutions. This is definitely something that can generate interesting opportunities for us downstream.

What other opportunities are you eyeing for future growth?
We are very keen to explore all types of artificial lift systems, such as ESPs [electrical submersible pumps] and coiled tubing, to expand our service portfolio within the oilfield segment. We hope to gain at least one such project under our belt in the next five years.
Then, the offshore exploration campaign is big news for Kuwait. We haven’t talked about strategy yet since it all begins with drilling, which we don’t do. But we are prepared post-drilling, and given our experience in Abu Dhabi, where we delivered offshore well-testing services for ADNOC, I think it is something that we could look forward to doing.
SPETCO has always been an advocate of pitching new concepts and solutions, as the EPF pilot showed, and we’ve had the confidence to test and apply them through the years.
I don’t fully agree with the idea, “If it’s not broken, don’t fix it.” The technologies that we have proposed and have been accepted have kept us afloat these years. We have been focusing on our existing projects, but 2024 can be a good year to pursue new ones along with the expansions to the production facilities we operate. At the same time, we don’t want to bite off more than we can chew. Being selective about what we take on always makes the most sense for us.

Read our latest insights on: