All industry outlooks unanimously confirm that the Kuwaiti oil sector is standing on the threshold of a bright new era of progress and prosperity.

What with large projects already in motion and bigger ventures all set to start, KPC's present and the future never looked brighter. The strategic directions for the year 2020 indicate that the only way to go from this point onwards is up.
To ensure the application of all strategic plans, KPC and its subsidiary companies are operating in two parallel lines: on the one hand, continuously developing existing operations, while on the other, launching a number of major projects to strengthen the sector's business for several decades ahead.
The corporation announced the start of several big projects and investment opportunities that will ensure the enhancement of upstream and downstream activities, creation of new job opportunities, bigger dividends for the oil sector, and competitive investment opportunities for the private sector.
Market analysts observe that there is a strong sense of optimism, which prevails in the oil sector and Kuwait in general.
They believe that Kuwait has positioned itself as the Gulf's new commercial gateway. It is driven by an increasing desire to modernise its infrastructure and launch development projects directed toward increasing and developing its sources of revenues and achieving a more active national economy.
The decision makers at KPC recognising that the corporation is an integral part of the economy of Kuwait, are looking forward to enhancing production and processing capabilities in various areas in order to increase revenues, distribute income and strengthen Kuwait's position as a major global energy producer.

Huge forthcoming projects
There are several key projects in the pipeline that were launched by the Ministry of Energy and the corporation. These projects include plans to enhance refining capacity, and KD3.3 billion has been earmarked for the building of a new refinery to raise the refining capacity to a million bpd. Another project is to build a new pier and to upgrade the Northern Export Pier at Ahmadi Refinery.
With regard to exploration and production, several large projects are being executed at a total cost of KD6.5 billion in order to increase production capacity to four million bpd. These include an increase of production through Project Kuwait to develop the northern fields with the assistance of international oil companies.
Furthermore, KPC has optimistic expectation for several large petrochemical projects with a total cost of KD1.8 billion, including the Aromatics and Olefins Complex, and also in electricity and water development, where the Ministry of Energy has plans for large projects in transmission networks and distillation plants at a cost of several hundred million dinars.

Major energy projects programme
As it commemorates its silver jubilee, KPC has entered a major phase of expansion in the oil sector in Kuwait. Recent estimates of long-term oil demand from the IEA indicate that world demand for oil will increase from the current level of 80 million bpd to 120 million bpd over the next 25 years, and with the Middle East holding half of the world's oil reserves, it will meet at least two thirds of the increase in demand. It follows that this will require an increase in capacity from Kuwait.
As mentioned earlier, according to KPC's strategic directions until the year 2020, the oil sector seeks to achieve the following goals:
- In the upstream sector to reach a crude oil production capacity of four to five million bpd
- In the downstream, to study the expansion of refining capacity up to 1.5 million bpd by 2010, while meeting the local energy demand, and using the future heavy oil availability.
- In chemicals, to expand inside Kuwait, into chemical projects integrated with oil activities and develop the new aromatics and olefins projects, preferably with joint venture parties, and to focus on the chemicals with high growth potential.
These three plans alone will require KPC to spend about KD11.6 billion or close to $40 billion over the next 20 years. This number would increase by another $5 billion, if KPC targeted five million bpd.

Exploration, production
According to a study released by the IEA, oil companies will have to invest up to $5.3 trillion over the next 30 years to supply the world's increasing demand for oil and natural gas.
That would include $2.2 trillion in investment for new oil production, as worldwide demand for oil surges to 120 million bpd by 2030 from 77 million bpd in 2002.
KPC is set to expand its production capabilities in such a way as to maximise return on the invested capital, while observing ecological factors and preserving the environment, and finally, improving contractual relations with our partners, both financiers and contractors.
 These targets are challenging to say the least, however, there is strong determination to carry them out.

Fourth refinery
The Supreme Petroleum Council has given the green light to building Kuwait's fourth refinery which will positively enhance refining capacity as per strategic directions.
The idea of establishing the fourth refinery was conceived due to the expected increase in petroleum products. Around six years ago, KPC and its subsidiaries commenced plans to establish a fourth refinery.
 The project gradually began to crystallise, until it reached its current stage of maturity. The ambitious project attained the consensus of the oil sector's upper management and the Supreme Petroleum Council.
Prior to getting the nod of approval from the Supreme Petroleum Council, the project went through different phases. The decision to replace heavy fuel with more environmentally friendly gas and the need to meet the state's electricity consumption demanded the proposals to import gas from neighbouring 'gas rich' countries such as Qatar and Iran. Then several elements led to the speeding up of the refinery project: the first of these being the Ministry of Electricity's construction of the power generating station at Zor, which will be ready in 2007. It is estimated that 200,000 barrels of fuel oil per day will be needed.
Additionally, it was felt that it was important to build a fourth refinery to meet the strict environment regulations imposed on petroleum products. Enhancing HSE performance has become a top priority for the oil sector so it was important to apply new environment friendly capabilities.
Currently, some existing power stations emit sulphur and other harmful impurities into the environment, simply because they use heavy oil. It is also expected that the new refinery project will create more job opportunities for national workforce to absorb graduate technicians, administrators and others.
The refinery project is part of KPC's long-term strategic directions, which aim to increase future refining capacity.

New oil tankers
This unique project will ensure that all new tankers will be compliant with all international standards and will fulfill KOTC's objectives to remain a regional leader.
KOTC has recently begun implementation of the plan for the upgrading of its oil tanker fleet and replacing its single hull tankers by signing contracts for the building of seven new tankers of the latest specifications with Daewoo and Hyundai companies.
According to the agreements, both companies will build seven oil tankers in total. The first contract with Daewoo covers the building of one Aframex oil tanker of 114,000 tonnes capacity, to carry oil products, and two PANAMAX of 69,000 tonnes capacity each to carry oil products.
Hyundai Company will design, build and hand over four tankers to KOTC: two Very Large Crude Carriers (VLCC) of 31,7000 tonnes capacity and two Very Large Gas Carriers (VLGC) of 82,000 cubic metres capacity for carrying ammonia and liquefied gas.
KOTC owns only two double-hulled tankers.
The standard of the company in this respect is lower than that of other tanker owners in the Middle East and around the world; an important factor in forcing KPC to proceed with the company plans to upgrade the fleet.
The signing of the contracts is regarded as a major achievement and a positive progress in upgrading the company fleet.
Replacing the old ships will, in turn, open new horizons and pave the way for a prosperous new future for the Oil Tankers Company, increase the general efficiency and performance of the company, and strengthen opportunities for competition on global markets. Undeniably, the international oil transport industry is facing a great challenge in implementing the stringent HSE standards concerned with protecting the environment from pollution and oil leakage.
Because of the strict laws related to marine environment protection, there is an increasing demand for modern double-hulled tankers, which has kept the lease prices of tankers high during the year.
The company is also facing many challenges.
The cost of building new tankers has risen to the highest levels during the past 10 years because of the continuous increase in steel prices resulting from the global economic revival and the huge demand in China for steel for its construction and manufacturing industries.

EQUATE 2
On the lines of the successful EQUATE petrochemical venture, the Petrochemical Industries Company (PIC), a KPC subsidiary, and the Dow Chemical Company (DOW), announced the formation of two new joint ventures that are designed to further develop their commercial relationship in the petrochemical industry.
  Subject to regulator review and customary approvals, Dow and PIC will form: MEGlobal, a 50/50 global joint venture for the manufacture and marketing of merchant monoethylene glycol and diethylene glycol (EG) and Equipolymers, a 50/50 global joint venture for the manufacture and marketing of polyethylene terephthalate resins (PET) and the manufacture of purified teraphthalic acid (PTA).
PIC and Dow propose to construct:
• Olefins II, a new ethylene and derivatives complex in Shuaiba, Kuwait.
• A new ethylbenzene/styrene unit in Shuaiba, Kuwait.
These projects build on the successful business relationship in Equate Petrochemical Company between PIC and Union Carbide Corporation, a wholly owned subsidiary of Dow.
These projects combine Dow's strong existing asset base, technology position and market presence with PIC's commitment to increasing its investment in downstream petrochemical markets.
Additionally, they demonstrate the commitment of Dow and PIC to better supply growing customer needs for these products around the world.
The joint ventures represent PIC's largest investment to date outside of Kuwait, and these further investments with Dow represent an important milestone in developing PIC's strategy to expand its participation in the global petrochemical industry.
PIC represents the petrochemical arm of KPC and produces fertiliser and petrochemicals. PIC has invested in the modernisation of its
fertiliser complex in Kuwait and expects to reach one million tonnes per annum of granular urea production. It also runs a 100,000 tonne per annum polypropylene plant through an arrangement with Equate.

Calciner coke plant
As part of its quest to offer more opportunities for the private sector to invest in the oil sector in order to accelerate the economy wheel, KPC decided to privatise the coke calciner plant.
By this move, KPC has activated a long-awaited programme to open new areas in the vital petroleum industry to the private sector. This plant is one of the many petroleum projects that KPC is planning to introduce to the private sector.
The plant uses crude petroleum coke from KPC's Mina Abdullah Port Refinery as a primary source during production. The calciner is a product used mainly for the aluminium industry.
Al Mal Kuwaiti Company won the tender and the value of the project is estimated at $150 million.

Privatisation of fuel stations
The process of privatising the fuel stations is going smoothly within the set framework and plans.
A new company to manage the stations has been established and KPC owns 24 per cent of its shares.
It will oversee the operation of 40 stations. It is expected that this project will create a competitive environment and benefiting consumers as well as promoting various job opportunities.
The primary reason for the privatisation is that the sale of gasoline or petrol in stations is not regarded as one of KPC's main activities. As is the case in many other countries, it will now be undertaken by the private sector.
The national manpower will not be adversely affected by transference to a new company because a strict proportion of Kuwaitis must remain employed in supervisory positions. Furthermore, this type of project is likely to lead to more job opportunities, resulting from increased competition and service quality such as round the clock opening hours, car washing facilities (currently only four gas stations offer this service), the efficient sale of oil and supermarket services.
Nationals working in the stations at the moment will be given the opportunity to move to the new company via contracts that regulate the transference of ownership. Moreover, KNPC and the new company will operate the stations together for an interim period of one year.