KPI: Fostering innovation and new partnerships in a changing global energy landscape

Can you give us your insight into Kuwait’s comprehensive strategy to adapt to a transforming global energy landscape and your assessment of the current global and regional trends?

In spite of the geopolitical tension in our region, OPEC has succeeded in playing a stabilizing role. Most market analysts believe that non-OPEC oil production will slide, with OPEC producers filling the gap for the short-to-medium term. As Kuwait is an OPEC founder and member, we will continue to play our role as a stable, reliable, and trusted supplier of energy.

Moreover, megatrends in technology, namely those involving autonomous cars and electric vehicles (EVs), will have an impact on the energy industry in the period starting now and more in the coming decades. Many countries in Europe have already issued legislation to weed out the use of vehicles operated by an internal combustion engine (ICE) within the next decade, but it remains to be seen how the rest of the developing world will react to the increasing demand for EVs. Furthermore, as the market is moving towards cleaner energy, evolving stringent legislation like IMO bunker fuel specifications are going to impact the hydrocarbon industry heavily. The refineries would invest heavily in upgraders to minimize production of heavier streams.

What are KPI’s key projects for 2018/2019?

Our key projects are the commercial commissioning of the Nghi Son Refinery & Petrochemicals project in Vietnam, the beginning of construction on Duqm Refinery & Petrochemicals in Oman, and we are seriously pursuing another opportunity in the South Asian Subcontinent, which we will discuss once the project progresses.

The focus of our key projects for this year is growing our refining capacity in Asia because of the concentration of high-growth captive markets in it. We are continuously pursuing partnerships with international players that share our common goal, and we plan to integrate our petrochemical operations with our refineries to increase value.

Another focus of ours is growing our retail business in Asia, through Idemitsu Q8, our JV marketing company in Vietnam. We expect to open more sites by the end of the year. We are also pursuing projects in Europe to sustain and grow our business and market position in light of declining demand scenarios. Specifically, we are looking into projects that foster innovation, mobility and enhanced forecourt solutions.

What is the market share of your operations in Europe? Do you have operations in the US or are you planning to initiate anything there in the future?

Q8 is the second largest player in Italy, Belgium, Luxembourg and Sweden, and the fourth largest player in Denmark. With over 5000 retail stations, Europe has been our key market for more than 3 decades, and it is our plan to strengthen our position there by improving the efficiency of our current operations. Our recent growth in Europe was 15%, which is a very high percentage if you consider the declining demand in the region. In 2016, European demand for petroleum products dropped 16%, and yet we have been able to increase our market share because we concentrate mainly on countries where we operate: Italy, Belgium, the Netherlands, Luxembourg, Sweden, Denmark, and Spain. In these countries, we are also enhancing our international tools and value-added services to meet the fueling needs of international road transport companies and retail customers.

Our operations in the US are mostly the sale of our lubricants, under our brand Q8Oils. While our strategic geographical focus is Asia, we are still open to consider any opportunity within the US.

How could knowledge exchange between the U.S. and Kuwait in the energy sector benefit both nations?

The Kuwaiti oil sector offers deep industry knowledge of refinery integration with petrochemicals. Our refining expertise is a best practice we share with many of our JV partners, and we would gladly exchange our knowledge with refiners in the US.

Furthermore, our internal research and technology center, Q8Research (www.q8research.com) has developed decades of expertise in applied research on cost-effective petroleum product formulations, quality control, and adherence to Europe’s ever-changing environmental regulations.While its client base is mainly in Europe and Kuwait, we look forward to pursuing partnerships with similar research and technology centers in the US and expanding our scope of services.

Last but by no means least, our global aviation fuel business, Q8Aviation (www.q8aviation.com) provides technical services and advice on jet fuel handling and storage with major operators in Asia and Europe, and we be very interested in learning best practices and sharing knowledge from the aviation industry in the US.

Can you elaborate on your plan to invest $8 billion in overseas petrochemicals in the US, Bahrain, Canada, and South Korea?

Our sister company, Petrochemical Industries Company, is actively pursuing petrochemical business expansion projects in the mentioned countries, especially for a Derivatives & Specialties production increase through the setting up of more JVs.

Can you provide more details about production and expansion plans for Q8?

KPI is the international downstream arm of parent company, KPC, and we add value by securing outlets for Kuwaiti crude and adding high-conversion refining capacity in expanding Asian markets.

We are expanding our refining capacity, our goal is to reach an international refining capacity of 1.3 million barrels per day by 2040, and Asia is our focus for this expansion. We are near 100% commercial commissioning of our US$9 billion JV refinery, the Nghi Son Refinery Project, in North Vietnam. We have also given the ‘Notice to Proceed’ for our EPC contractors to begin the work on our JV refinery in Duqm, Oman, with Oman Oil Company.

One of the major themes of Kuwait Vision 2035 is to enhance Kuwait’s regional and global presence in various spheres, including trade. We are currently doing so by entering into long-term partnerships in countries where we have strong political and economic bonds. Through our JV projects in Asia and Europe, we have shown the world that Kuwait is a reliable oil supplier, a flexible professional business partner, and a trusted friend. We have a national legacy of being international traders and Q8 will safeguard this legacy by nurturing our international partnerships.

Furthermore, Vision 2035 stipulates that we must develop a diversified and prosperous economy to lessen the country’s dependence on oil export revenues. Q8 is doing so by examining diversification opportunities aboard, including alternative fuels.

Q8 is looking forward to building long-term partnerships and maintaining them as added value for development and supporting operational excellence. Please elaborate on your current partnerships.

In southern Italy, we have the Milazzo refinery with a refining capacity of 268,000 barrels per day. It is a state-of-the-art, complex refinery with deep conversion that we operate as a JV with Italian oil major, ENI. We also own and operate 1,000 retail stations in Sweden and Denmark, under the brand OKQ8. This 50-50 JV we have with OKF, a social cooperative company based in Sweden.

In Asia, we are near commercial commissioning of the Nghi Son refinery (NSRP). It is one of the largest and most exciting projects in Q8’s history. NSRP is a joint venture between Q8 and partners PetroVietnam, Idemitsu Kosan and Mitsui Chemicals, to construct Vietnam’s largest refinery with a daily refining capacity of 200,000 barrels per day, and has been designed to increase Kuwaiti crude refining by 100%.

We have also launched a JV with our refinery partners, Idemitsu Kosan, called Idemitsu Q8 Petroleum Limited Liability Company (IQ8 for short) with the purpose of distributing petroleum products in Vietnam. We have opened two retail stations near Hanoi, with a plan to cover the area between Hanoi and Haiphong first (North Vietnam) before moving to the central provinces over the next three years.

Both business ventures fit strategically with our objective to secure outlets for Kuwait Export Crude and our refined products. We will supply a steady and secure slate of products to the growing Vietnamese market, and subsequently contribute positively to Vietnam’s social and economic development.

Do you have some new ones in the pipeline?

We are pursuing opportunities in South Asia, so we can reach 1.3 million barrels per day by 2040.

In addition, we have collaborated with Oman Oil Company to build a grassroots refinery in South-central Oman. The Duqm Refinery & Petrochemicals Industries Company, DRPIC, is a 50-50 JV between KPI and OOC, which, once complete, will add 230,000 bpd to Kuwait’s international refining capacity. We broke ground on this project on 26 April of this year and we expect it to be ready for commissioning by 2022.

Please discuss your professional background and how it has influenced your responsibilities as President of KPI. What would you say have been your most significant achievements during your time representing the oil and gas sector in Kuwait?

After completing my bachelors degree in chemical engineering, I started my career in domestic downstream at our sister company, Kuwait National Petroleum Company (KNPC). I worked in the refineries for ten years, which included the most difficult period of all Kuwaitis’ lives, the Iraqi invasion of Kuwait in 1990 and after the liberation of Kuwait in 1991.

After the liberation in 1991, I continued to work in the refineries until the end of 1993, when I transferred to the corporate planning department at our ‘mother’ company, Kuwait Petroleum Corporation (KPC.) I spent fifteen years in corporate planning, until I reached the head of Corporate Planning.

I then rose to senior management in 2007-2012, when I was appointed to lead our midstream sector as Chairman and CEO of Kuwait Oil Tanker Company (KOTC). Afterwards, I led our corporate administration function as Managing Director from 2012-2013 and our International Marketing Sector from 2013-2018. Now, I head international downstream as CEO of KPC Holdings Aruba and President of Kuwait Petroleum International.

Throughout my thirty-three years of service to the Kuwaiti oil sector, and through the trials and tribulations that we have faced as a nation and an industry, I have worked with some of the finest teams of people, and it is teamwork that made us succeed. If I have acted as a catalyst for positive gradual change, and if I have influenced the teams I led by being an example for service, dedication, and the highest standard of ethics, then this is my crowning achievement. I have created a legacy of service to my country and my industry, and I am proud to be remembered for it.

Please share a final message about Kuwait with our readers.

I am confident that Kuwait will work with our international partners to ensure the world’s supply of energy is stable and uninterrupted. We pride ourselves on our contributions to the countries where we have been operating for decades, and we express our sincere gratitude to them for the encouraging business environment and support. We will continue to be an ethical business partner and a trusted friend to all those with whom we do business. Our relationship with the United States is valuable to us and we will nurture it with stronger business ties for years to come.