Strong private sector support in KuwaitJune 10, 2020
Tareq Qaddumi, CEO of SPETCO, talks to The Energy Year about how the company has adapted to new workplace realities and the Kuwaiti government’s support for the private sector throughout the pandemic. SPETCO is an oilfield services and equipment supply firm that specialises in well testing, artificial lift and building production facilities.
How has SPETCO been adjusting to this new reality and what early challenges did you face?
So many different things happened so quickly, and it just escalated. Things were going smoothly in the head office, and within a week we had to adapt to a situation that nobody anticipated. In the beginning, it was quite messy. We didn’t know what to do. We’re very fortunate to have zero Covid-19 cases so far.
The earliest challenge for SPETCO was how to prevent something invisible. Our company’s culture has always been to protect our employees and staff from dangers such as H2S gas and accidents on the job, but it never had experience with infections. So, we had to come up with an immediate plan to safeguard our employees.
The first thing we needed to do was make sure that our camps were safe. We occupy two buildings in Kuwait that house hundreds of our employees. The building facilities are good, but they can be congested. People share elevators, basements, etc. So, we really had to take stringent and drastic measures to penalise whoever was going against our Covid-19 policies. So, tackling our camps was the first thing we had to do. We had to come up with creative ideas to prevent the worst from happening. This was the main challenge: to take care of our people and prevent the virus from spreading.
The same goes for our corporate office. We had to abide by the government restrictions and give two weeks off which turned into months. We really had to adapt to that because our operations work directly with our HR, logistics and IT teams in the supply chain. We’re all directly linked with those departments based in the head office. We are currently rearranging our head offices in a way where social distancing and other crucial safety practices will be part of our new dynamic and setup.
A major struggle has been the balance between being empathetic towards the welfare of our employees and trying to sustain the company as a whole. We have been blessed to have ongoing contracts that have not been affected. KOC needs to keep producing, and this is what SPETCO does. So, ongoing contracts are still bringing in revenue. At the same time, we never know what’s going to happen. Contracts will be delayed or KOC could say that KPC requires us to give a discount due to the oil prices. This hasn’t been easy at all. Because of these uncertainties, we had to implement some cost-cutting measures.
The whole industry has been faced with the dual shock of Covid-19 and the oil price crash. From your point of view, which of those two elements is the most damaging to the market outlook in the medium term?
In the medium term, I would say the virus because there’s a direct link between the stabilisation of the pandemic and the economy. Obviously, the oil price is going to affect a lot of us. I mentioned that currently we’re fine, but we were planning to bid for a few tenders in 2020 that have been cancelled or delayed. So, what we forecasted is not going to be a reality anymore. There’s no telling what’s going to happen and how long those contracts will be delayed for. That’s also a reason why we had to apply these cost-cutting measures.
You were previously looking at potential activity in the Kurdistan Region of Iraq. What’s your outlook for that market?
In Kurdistan, it is quite volatile politically as it’s a part of Iraq. We tried for a few years, but we had to put this on hold. It was too much for us, and at the same time the market in Kuwait was very promising. So, I thought we should just use our resources for Kuwait instead of moving forward with Kurdistan.
This crisis might bring about more global needs for plastic products, and Kuwait could eventually stand to benefit from that. Do you see a possibility to benefit from such a downstream drive?
In the downstream, our opportunities are on the construction side, so we have potential in helping build the refineries. We set up a fabrication shop, so we will benefit from those opportunities. With the chemicals themselves, we never really got into the petrochemical business. I think the opportunities there would be to represent these chemicals and catalysts products that would essentially be sold to the refineries.
We do have a production facility that transports sulphur to KNPC, which is the downstream entity. So, there are opportunities there as well. However, for a company like SPETCO, the outlook would be mainly to help with the construction.
The private sector represents less than 10% of Kuwait’s GDP, which is dominated by giants such as KOC, KNPC and other state entities. How do you rate the efforts put together by the government in supporting the private sector in the face of this crisis?
We’ve been really lucky and blessed to have a government that is able to aid and adapt to such a crisis, especially for the private sector. Being a private company, we’ve seen the difference in other nations, especially in the Gulf, so we are lucky to benefit from that government support.
What sort of crisis management financing practices have you observed not only in your organisation, but outside of it with the companies you are working with daily?
The whole supply chain has been affected, from manufacturers to shipping and logistics. That has been a struggle. We were planning on stocking up on spare parts just in case anything happened. Everything is delayed.
What do you think is going to be the main change in the post-Covid-19 world?
It’s really going to be interesting. It’s going to be challenging on all fronts, personally and in the corporate world. Travelling will definitely be affected, whether that’s vacations or business trips. I don’t think I’m going to be on a plane in 2020, and I have to accept that reality. It will be a challenge to adapt without travelling.
Obviously, we will be social distancing in the office and changing our seating arrangements. We must really take this seriously, even though I still feel like I’m in an episode of the Twilight Zone. Most importantly, we have to find a way to prevent this from happening again in the future.