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Wednesday , June 29 2022

Imminent major changes in KPC with ‘cost cuts’ in mind

This post has been read 23144 times!

IT is either that or a repetition of the previous years’ situation with no changes in the mainstream or upgrade or add value to the organization or bring about changes in the directions for improving efficiency, work ethics or productivity. They are simply waiting for monthly pay checks while being in line for promotion and retirement after 35 years of service. This is the story of Kuwait’s oil industry and the affiliated companies.

Kamel Al-Harami

Crude oil production level still stands at less than three million barrels per day, while there is an increase in employment by double in the last ten years to more than 24,000 employees. This is costing the oil sector KD 3.1 billion, with an average of about KD 7,000 ($ 21,000) per month. In other words, the salaries and benefits alone make up 50 percent of the total production cost of KD 3.2 billion.

The highest paid are in the oil industry or within the national oil companies. No wonder there is a fight for any job in KPC and its companies. All that is needed is just good contact and connections. The main concern for the government is that the number of employees have doubled in the last ten years while crude oil production remains stagnant at below three million.

Even last month when Saudi Arabia, Russia and the United Arab Emirates agreed with the oil organization to increase by 11.5 million for Saudi Arabia and Russia, and by 3.5 million barrels for the UAE, Kuwait stayed quiet and did not seek any increase in future capacity.

It is to remain silent with effect from the end of next year in full agreement with OPEC Plus. However, KPC will continue to hire and recruit more locals. Our oil ministers are, in the meantime, thinking of increasing the ratio of local employment to more than 85 percent! Just when the government started pushing our oil industry to cut costs and expenses, one of its members is seeking to hire and recruit more staff. Of course, KPC will issue, announce, and circulate all kinds of directives on reduction of expenses like the previous management. However, can they touch employees and think about reducing costs related to benefits and other incentives? We simply doubt any reductions now or in the near future. The only thing that may be achievable is to bring top management from outside our oil industry. Kuwait’s oil industry needs hard and tough top executives with full support of a strong government. They should be from outside KPC and its affiliated companies’ corridors and should have no attachments. This is only if we are serious.

By Kamel Al-Harami
Independent Oil Analyst
email: naftikuwaiti@yahoo.com

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