Kuwait’s recent downstream developments

Kuwait

Hasan Qabazard, CEO of the Kuwait Catalyst Company, talks to The Energy Year about the impact of the Al Zour refinery on Kuwait and the effect of recent developments on the country’s downstream market. The Kuwait Catalyst Company is a Kuwaiti shareholding company that provides complete catalytic solutions to the regional refining industry.

What is the impact of the recently launched Al Zour refinery on Kuwait’s economy?
The Al Zour refinery came on stream at a critical time for the global refining industry because of the ongoing conflict in Ukraine and the resulting challenges to the gas market in Europe. That has caused refining to gain more relevance. This is even more true now that the winter season is approaching. If you look at fuel stocks in several OECD countries, the United States or China, you see a deficit of heating oil, diesel and gasoline, which translates into higher prices for these products. Therefore, having additional refinery capacity is critical for Kuwait and its economy.
In addition, the new refinery, by producing cleaner fuels, will improve the air quality in Kuwait, contributing to the tackling of the country’s high pollution.

How do you assess Kuwait’s downstream market, considering the recent developments?
Notably, Kuwait refineries are unique in the GCC area as being the only ones to concentrate on cleaning the bottom of the barrel, like refineries in Japan and some in the US. The bottom-of-the-barrel processing, that is, atmospheric residue upgrading, makes further downstream processing much easier in Kuwait. Today, with the Al Zour refinery, Kuwait’s capacity to treat crude oil residue has increased dramatically, with the country needing close to 11,000 tonnes per year of bottom-of-the-barrel hydrotreating catalysts – the solutions that we manufacture – as compared to the 3,000 previously required by the market. Our plant has a nameplate capacity of 5,000 tonnes per year, but we could bring it to 6,500, a 25% increase. However, the rise in Kuwait’s refining capacity has not translated into increased business for our catalyst solutions due to the opening of new catalyst plants around the world. Among these is the large plant in Lake Charles, Louisiana, from our ally Advanced Refining Technologies (ART) – the JV between Chevron and W.R. Grace & Co – and a plant in China launched by a partnership with Shell.

What is your assessment of the GCC area’s competitive landscape for catalyst solutions?
Globally, we compete with Shell, Topsoe and Albemarle, while we are the sole manufacturer in the GCC area. That is because our service is based on a proprietary technology that is difficult to obtain from the licensors. KCC’s plant was built using the HOP technology – a Japan Energy Corporation patent, the rights of which ART procured in 2005 – provided by the Japanese company presently known as Jx Nippon Oil & Energy Corporation, after the Iraqi invasion of Kuwait in 1991. The agreement occurred precisely in 1994, as part of a public relations campaign promoted by Japan in Kuwait, which saw the Kuwait Institute for Scientific Research and Japan Energy signing several agreements to undertake pilot plants and catalyst experiments to develop catalyst solutions. Today, we produce HOP and ICR catalysts, which are a Chevron design.

Are you planning to develop new catalyst solutions?
While global refining capacity will increase by about 6-7 million bpd between now and 2040, I anticipate that by the same year the world will need an additional 20-25 million bpd of desulphurisation capacity, due to the new stringent environmental regulations being introduced around the globe that are driving up the demand for cleaner fuels. For this reason, we are planning to add new technologies. We are currently conducting trials for a new technology from Chevron, hydrocracking catalysts to treat the middle of the barrel. That makes part of our agreement with Advanced Refining Technologies (ART), the joint venture between Chevron and Grace Davison. ART is constantly developing new catalysts that absorb more metals and remove greater amounts of sulphur and nitrogen. Once these catalysts are ready to be tested, we conduct the trials for them with our modern plant here in Kuwait. Once we get the suitable properties for the catalysts, we start the manufacturing process. Under this agreement with Chevron, we have already added many new catalyst solutions.

What are your operational objectives for the coming years?
Our pieces of equipment have been running for 22 years, and we are planning a replacement programme to modernise them by 2023 or 2024. We also have expansion plans already in place to add new production lines. The expansion project is expected to start in 2024, and the new lines will be ready for production in 2026. The business is destined to grow because of the strategic importance of our plant to both Chevron and Kuwait players, especially KPC and the KIPIC refinery. The latter purchased its last two catalyst shipments from us, acknowledging the vital role that KCC and its cutting-edge technology play for the country.

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