Kuwait’s KOC pairs production growth with innovation

Kuwait

Ahmad Jaber Al-Eidan, CEO of Kuwait Oil Company (KOC), talks to The Energy Year about the company’s critical role in Kuwait’s oil production expansion, its recent innovations to mitigate environmental impact and its latest advances in digitalisation. State-owned KOC undertakes exploration, drilling and production of oil and gas in Kuwait.

This interview is featured in The Energy Year Kuwait 2024

What would you identify as the key pillars of KPC’s 2040 upstream strategy and the role KOC will be playing in supporting its oil output targets?
KOC, a pivotal entity within the Kuwait oil and gas upstream sector, is guided by a strategic vision. Since the inception of Strategy 2040, our primary focus has been to solidify our standing as a reliable supplier of energy in the global market. Our ambitious goal is to attain a production capacity of 3.65 million bopd by the year 2035. To achieve this objective, our organisation has diligently embarked on implementing a comprehensive roadmap, marked by significant capital investments and strategic functional enhancements.
A notable example of our commitment to strategic improvements is the ongoing restructuring of our organisational framework. This initiative is designed to facilitate a swift and efficient build-up of production capacity, with a heightened emphasis on developing new oil resources. The strategic organisational changes are instrumental in fostering agility and responsiveness within our operations.
Furthermore, KOC is actively refining its model for engagement with IOCs. The objective is to strengthen collaboration and increase the involvement of IOCs in supporting KOC’s overarching strategy. This collaborative approach aims to leverage external expertise and resources to enhance our capabilities and ensure the successful realisation of our production targets.
We are confident that we are on the right course to seamlessly execute the 2040 Strategy. These initiatives position us favourably to fulfil our energy market commitments and reinforce our role as a reliable and influential player in the global energy landscape.

Can you walk us through the concrete steps KOC has taken to successfully combine an increased hydrocarbons production with more environmental awareness in carrying it forward?
As mentioned earlier, KOC is strategically driven, utilising our five-year plan as a tool to implement and achieve our strategic objectives. Looking back at the previous year, we take pride in several significant achievements that contribute to meeting our strategic targets.
Firstly, we made history by drilling our first offshore exploratory well, NouKhetha-1, one of six exploratory wells aiming to open this new strategic frontier. Moreover, the second well is currently under drilling.
Secondly, KOC commissioned a gathering centre in the Burgan area with a production capacity of 120,000 bopd. This centre not only aids in meeting our five-year plan targets but also assists in treating sour crude from the Minagish formation in the greater Burgan field.
Thirdly, KOC has aggressively expanded its drilling and workover capabilities, resulting in the completion of about 412 wells drilled and approximately 2,000 rig-workover jobs. With around 90 workover rigs and a similar number of drilling rigs, this capability aligns with KOC’s intention to increase production capacity as planned in the five-year strategy.
Fourthly, KOC proudly achieved 0.5% flaring for the second consecutive year. This substantial reduction, from 17% in 2005 to 0.5% today, stems from the implementation of a long-term plan, commitment, execution of capital projects and the establishment of a responsible HSE culture throughout the organisation. The benefits of flaring reduction extend beyond economic gains to environmental preservation.
Additionally, KOC, in collaboration with KPC and its subsidiaries, developed an ambitious 2050 Energy Transition Strategy along with a detailed implementation roadmap. This strategy involves a shift towards cleaner and more sustainable energy sources, aiming for carbon neutrality by 2050. It encourages a diversification of energy sources, reducing reliance on fossil fuels. KOC has identified specific alternative energy initiatives, such as renewables (wind and solar) and hydrogen, to adapt to changing global energy dynamics and adhere to international environmental agreements.
As for our priorities in 2024, KOC will continue exploring and developing greenfields. This is in addition to enhancing and building its capabilities to reach oil and gas production capacity targets for the next five years. This includes ongoing offshore exploration drilling and the commissioning of the new Jurassic Gas Facilities 4 and 5, a significant milestone expected in early 2024. The finalisation of EOR plans for several of our reservoirs is another key priority this year.

What are the latest developments in offshore operations and how important is the exploitation of those resources for the overall upstream strategy?
KOC sees offshore exploration as a new challenge and frontier. We initiated the offshore exploration campaign a few years ago, utilising comprehensive seismic projects covering a large section of Kuwait’s territorial waters. The early indications were promising, prompting KOC to progress with offshore drilling for further investigation. We have contracted Halliburton to drill six wells over the next four years. The drilling of the first is completed and it is under testing now, while the drilling of the second is ongoing.
Our offshore potential is crucial in implementing our growth strategy for crude production capacity, with offshore exploration being a major pillar of KOC’s strategic initiatives. While the indications are promising, the actual potential will become clearer once the exploration phase is completed.
Additionally, the Dorra gasfield holds significant potential for production and revenue for our country. However, the field is currently managed by our sister company, Kuwait Gulf Oil Company (KGOC).

What are the plans ahead for KOC to step up its drilling activities?
The expansion of operations and project implementation necessitates a substantial buildup of capabilities in both core and support activities. KOC aims to increase its well drilling capabilities to 500-plus wells per year and workover activities to over 2,000 jobs per year. Simultaneously, an increase in material usage is expected due to the expansion of operations. Additionally, KOC has embarked on expanding its efforts in new technology and digitalisation to enhance operational efficiency and cost optimisation. This keen requirement necessitates increased participation from both local and international service companies.
Finally, it is worth mentioning that KOC has a long-term plan to develop the South Ratqa heavy oil resources. Currently we produce around 60,000 bopd of heavy oil from the field, and we are in the process of developing our plan to expand this capacity to about 120,000 bopd in the next seven years.

As KPC invests USD 110 billion in its energy transition goals, what initiatives is KOC promoting to reach net-zero emissions by 2060 and produce lower-cost, lower-carbon oil?
KOC is actively aligning itself with KPC’s ambitious plans to invest USD 110 billion in realising the group’s energy transition strategy. This substantial investment underscores KPC’s commitment to adopting ESG principles as a core strategic element, with the ultimate aim of achieving net-zero emissions by 2060 while producing more low-cost, low-carbon oil in the years to come.
At the forefront of this transition is KPC’s comprehensive energy transition strategy, in which KOC plays a pivotal role. This strategy serves as a guiding framework, shaping KOC’s response to the imperative reduction of carbon and gas emissions. The KPC 2050 Energy Transition Strategy specifically targets the minimisation of greenhouse gas emissions within Scope 1 (direct emissions from own operations) and Scope 2 (indirect emissions from energy consumed by own assets).
To operationalise this strategy, KOC has identified a roadmap with a series of initiatives as part of the implementation plan up to 2050. These initiatives are designed to address KOC’s specific contributions to the broader energy transition goals. Critical initiatives include a focus on renewables, the implementation of energy efficiency measures, flaring reduction, exploration of carbon capture, utilisation and storage (CCUS) technologies, and offsetting emissions through tree plantation projects.
In essence, KOC is fully committed to implementing a substantial shift toward a more sustainable operation while actively mitigating carbon emissions. Although our core business centres on hydrocarbons production, we recognise the significance of integrating renewable energy sources into our strategy to power our operations responsibly. The specific targets and milestones outlined demonstrate our resolute dedication to environmental goals and the pursuit of a sustainable energy future.
Moving forward, KOC remains at the forefront of initiatives that contribute to KPC’s broader commitment to ESG principles and global environmental sustainability

Following KOC’s recent contracts to rehabilitate the soil of damaged oilfields, what further steps is KOC taking with regard to environmental remediation and sustainable technologies for oil extraction?
KOC has recently taken significant steps in environmental remediation by securing contracts to rehabilitate the soil of damaged oilfields. Building upon this commitment, KOC is actively pursuing further initiatives in environmental stewardship and the integration of sustainable technologies for oil extraction.
At the core of our approach is a deep appreciation for technological innovation as a central driver of success in upstream operations. Recognising the importance of efficiency, sustainability and environmental conservation, KOC places a strong emphasis on adopting the latest technologies across all aspects of our upstream activities, starting from the exploration phase. This dedication ensures that we consistently leverage state-of-the-art technologies to yield the finest results.
In the area of reservoir management, KOC collaborates closely with our IOC partners to deploy cutting-edge techniques. This includes the utilisation of advanced reservoir modelling and simulation tools. These technologies play a crucial role in optimising field development plans and enhancing our ability to manage our operational footprint effectively. Through these strategic collaborations, KOC remains at the forefront of innovation, accessing the latest technologies and expertise in environmentally conscious oil extraction methods.
Environmental preservation is a vital objective for KOC. Prior to the implementation of any project, we conduct thorough environmental impact assessments, adhering rigorously to strict environmental regulations. These assessments are integral to our decision-making processes, guiding us in identifying and implementing measures to minimise our environmental footprint.
In essence, KOC’s commitment extends beyond contractual obligations, encompassing a proactive position on leveraging technological innovations and strategic environmental considerations. We prioritise efficiency, environmental sustainability and responsible resource management to optimise production while minimising our environmental impact.

What is the way forward for KOC in enhancing the company’s digital transformation journey and how important are strategic partnerships to accelerating its data-to-decisions cycle in the years to come?
Digitalisation remains a cornerstone within the framework of Kuwait Vision 2040, playing a pivotal role in the evolution of KOC. The successful implementation of projects such as the Kuwait Integrated Digital Field (KwIDF) is a testament to our commitment to harnessing the transformative power of digital technologies. Looking ahead, our strategic vision is centred on further enhancing the company’s digital transformation journey, recognising the much-needed impact it has on optimising operational costs and increasing production efficiency.
To advance this strategy, KOC is undertaking several key initiatives, with a notable example being the Kuwait Intelligent Digital Oil Field. This initiative, currently in its final stages of completion, represents a significant step forward. It facilitates the remote monitoring of all fields, providing real-time insights for more efficient and informed decision-making. The integration of live dashboards for activities related to oil and gas production is another noteworthy step, ensuring transparency and accessibility of crucial data.
Moreover, KOC has proactively transformed the Research & Technology Group into an Innovation Group. This strategic move aims to broaden the impact and value of the group by positioning it as a dynamic solution provider for KOC’s core business challenges. This shift towards innovation underscores our commitment to staying at the forefront of technological advancements, fostering a culture of creativity and problem solving.
Crucially, strategic partnerships are identified as critical requirements in accelerating KOC’s data-to-decisions cycle in the coming years. Recognising the dynamic nature of the digital landscape, collaborating with external entities, technology providers and industry partners becomes paramount. These partnerships are integral to accessing cutting-edge technologies and expertise and to fostering an ecosystem of innovation. By leveraging strategic collaborations, KOC aims to expedite its digital transformation journey and ensure the seamless integration of emerging technologies into its operational framework.
In conclusion, KOC’s commitment to digitalisation is unwavering, with a strategic focus on continuous improvement and innovation. The ongoing initiatives and the transformation of key groups within the organisation demonstrate our proactive approach to staying ahead in the digital era. Strategic partnerships are viewed as essential enablers, propelling KOC towards a future where data-driven decisions are at the core of our operational excellence.

How would you describe the key components of KOC’s business and growth strategy in 2024 and beyond?
KOC is a strategic organisation, and Strategy 2040 mandates the achievement of a production capacity of 4 million bopd by 2035 in the domestic upstream, sustaining this capacity through 2040. KOC’s portion of this production target is approximately 3.65 million bopd. We have constructed a comprehensive roadmap, outlining strategic initiatives to increase and maintain our production capacity. This plan is designed to explore new frontiers that will contribute to sustaining our target.
Our strategy involves the ongoing development of conventional oil and standard gas in the short to medium term, coupled with a dedicated focus on EOR and offshore projects. The exploration and development of new oilfields are pivotal in achieving the overall 2040 strategy. This strategy necessitates substantial investments in capital projects, encompassing the drilling of wells and construction of facilities across KOC areas, aimed at managing increased water production and enhancing reservoir pressure.
To execute these crucial projects, KOC, alongside KPC, plans to invest a significant budget exceeding KWD 12 billion [USD 39.2 billion] within the next five years. This financial commitment will progressively increase to meet our strategic targets. Additionally, KOC is actively seeking to strengthen relationships with IOCs and service companies, recognising their role in overcoming strategic challenges.

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