There will be natural growth in the demand for ESPs going forward.


Turnkey solutions for Kuwait’s oil and gas sector

May 9, 2024

Faisal Ayesh, president of Alkhorayef Kuwait, talks to The Energy Year about the growing importance of public-private partnerships in the energy industry and the company’s domestic and international expansion plans. Alkhorayef Petroleum is a Saudi company that designs, engineers and manufactures specialised production systems for the oil and gas sector.

Can you give us an overview of Alkhorayef’s footprint?
We are the market leader in Kuwait in artificial lift via electric submersible pump (ESP), with more than 1,500 Alkhorayef systems deployed by KOC and by Kuwait Gulf Oil Company in its joint operations with Saudi Arabia.
Our equipment is manufactured in Saudi Arabia. We compete with the world’s best oilfield services companies, and we are very proud of the trust that our customers place in us and our performance, as it demonstrates the quality of our services and our focus on results.
In the 28 years we have been working for top producers, we have acquired solid experience and invested heavily in our technology and people. The capabilities that we offer cannot be developed overnight, and the key to our success is that we have been able to understand the culture and the local dynamics where we operate. We realised what our customers needed, and we adapted accordingly.

What is your assessment of the current demand for artificial lift and ESPs?
There will be natural growth in the demand for ESPs going forward. When they started drilling in Kuwait, wells were healthy and young, and the number of ESPs installed was small. With age, liquids stop flowing as freely and artificial lift becomes necessary. This is a global phenomenon, not only in Kuwait. The artificial lift market is growing worldwide.
Moreover, Kuwait will need to drill more wells to reach its production capacity targets. That means more pumps and more demand for our services, so I can definitely see growth in our business.

Can you walk us through your investment strategy and how it has helped your position in the market?
One of the key factors for ESP customers is how long the equipment can run before failure. Failure means production stoppages and big expenses to bring in a replacement rig.
We have invested in our equipment and we are proud to say that we celebrated, at the beginning of 2024, the 10th anniversary of three of our pumps in Kuwait. That was a big milestone for the company. We are confident that this number will rise, given our commitment to ensuring that our designs and materials meet our customers’ requirements.
A key advantage that Alkhorayef has over the competition is that we are the only company in Kuwait that operates and maintains its own generators. In Kuwait, there are thousands of wells with ESPs, and sometimes there are no power lines nearby. We can supply generators along with our ESPs, and that significantly improves our efficacy.
When our peers have problems with their generators, they need to call a third party, while we have full control of our operations. We have invested significantly in this direction, expanding our generator fleet from 350 units in 2017 to almost 600 today.


What are your plans to further develop the company’s equipment capabilities?
We develop technology both via partnerships and on a stand-alone basis. Our pumps and generators are manufactured in Saudi Arabia, but we are in the process of establishing a manufacturing and repair facility in Kuwait, which we aim to commission before the end of 2024. We have always believed that, to provide a top-notch service, you need to stay very close to your customers.
The pandemic taught us a lesson in that regard. Oil production needed to continue, but moving goods across borders was very challenging, particularly via sea and air. We were able to meet the demand for our services for two main reasons.
First, we had an abundant stock of equipment that allowed us to keep our deliveries on track. Second, our manufacturing facility in Saudi Arabia is just three hours from our base in Kuwait, so we did not need to move our equipment using airlines or shipping services.
We kept our business flowing between Kuwait and Saudi Arabia. This shows the strategic importance of being in Saudi Arabia and the excellent relationship between the two countries. We were the only oilfield services company able to perform at that time.

What are the main benefits of manufacturing locally?
Having a local manufacturing facility helps us react faster and perform better in a sector that is all about timing. ESPs and their motors are not standardised, because different wells require different horsepower pumps. Instead of having to wait for components from abroad, which means more time and costs, we can use our inventory to react quickly to demand.
We have not decided on the capacity of our Kuwait plant yet; it will depend on the market. It will be scalable. The peculiarity of this type of manufacturing is that the equipment is custom-made and is not replaced often, so there is no need for continuous production. We can adapt to demand.

Tell us about Alkhorayef’s other main business lines.
Our main area of business is turnkey solutions, including operation and maintenance services tailored to meet the diverse needs of the oil and gas sector, such as oil and gas production and processing facilities, water injection facilities, water treatment and steam generation.
Our hallmark lies in our pioneering approach to installing EPFs [early production facilities], constructed on either a BOOT [build-own-operate-transfer] or DBOOM [design-build-own-operate-maintain] basis. Alkhorayef also has the capability and infrastructure to execute EPC projects.
We undertake the full spectrum of responsibilities, from investment and design to building, commissioning, operation and maintenance of production facilities. Following the contract period, the plant ownership is transferred to our esteemed clients in BOOT projects.
We are delighted to share our track record of unparalleled success in executing BOO, BOOT and DBOOM projects. Maintaining plant availability above contract requirements, meeting international standards with consistent product quality and surpassing contractual obligations underscores our commitment to excellence.
I proudly highlight the exemplary GC-16 [Gathering Centre-16] at EPF-18 in West Kuwait, a testament to our operational expertise. It was engineered and built by Alkhorayef and it operated flawlessly for seven years without downtime, demonstrating outstanding product quality.
Our journey with KOC dates to 1996 when we delivered our inaugural water injection facility project, a significant milestone as it was KOC’s first successful BOOT endeavour.
Furthermore, our innovative DBOOM pilot projects, such as the first cold heavy oil project in North Kuwait in 2008 and the subsequent two thermal heavy oil projects in 2016 and 2017, were landmarks in Kuwait’s heavy oil production landscape.
In summary, our legacy of excellence, demonstrated across decades of successful project deliveries, positions Alkhorayef as a trusted partner in advancing Kuwait’s oil and gas sector.

Can you give some examples of your activities and prospects in the production facilities segment?
Kuwait plans to reduce its carbon footprint in a limited timeframe. We play a role in meeting KPC’s strategic objectives to support Kuwait’s environmental objective by mitigating flaring in oil and gas facilities.
Our commitment to this vision materialised in the swift execution of a DBOOM project in the Wafra Joint Operations. Following the contract signing in March 2022, we conceptualised, built and commissioned two new state-of-the-art gas gathering and compression facilities within an unprecedented timeframe of nine months.
Since January 2023, these facilities have made a significant positive impact on the environment by effectively reducing gas flaring and channelling gas for further processing and domestic utilisation, thereby reducing gas imports. This achievement not only underscores our operational ability and efficiency but also reaffirms our commitment to the projects.
We remain dedicated to pioneering solutions that not only meet but exceed industry standards, driving tangible outcomes that greatly benefit our clients.

How has your business model changed over the years and what have been the key drivers?
KOC pioneered the introduction of the BOOT and DBOOM models in Kuwait, marking a significant breakthrough in involving private partnerships in oil and gas projects. Over the years, KOC has maintained an outstanding track record with projects of up to USD 450 million, collaborating with various local and international contractors, including Alkhorayef.
Traditionally, oil companies refrained from allowing contractors to own processing facilities due to the perceived safety risks. Instead, contractors executed facility projects on an EPC basis, under the strict supervision of the oil company. Upon successful commissioning, the facilities were handed over to the oil companies by the EPC contractors.
Since oil companies started adopting BOOT and DBOOM schemes worldwide, KOC has played an active role in sponsoring such initiatives in Kuwait. Notably, in the past decade, KOC has built multiple oil and gas facilities on a BOOT or DBOOM basis which were monitored strictly by the client during execution to ensure the safety and quality of the plant and equipment.
Furthermore, there has been a shift in the approach to financing projects in Kuwait. Previously, the K-Companies relied on KPC for project funding but, in recent years, KPC has begun requiring K-Companies to explore alternative financing options. In this context, the BOOT and DBOOM models emerged as the preferred choice, alleviating concerns about financing as contractors assume this responsibility.
BOOT and DBOOM schemes ease the government’s financial burden, fostering a more competitive environment by empowering the private sector. Overall, they contribute to economic stimulation and the creation of job opportunities in the region.

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