Kuwait Integrated Petroleum Industries Company (KIPIC) was established in November last year to handle various oil activities ranging from building new refineries and liquefied gas import facility and integrating the petrochemical unit in the refinery. The capital is estimated to be in the range of KD 6 billion ($18 billion). It will be under the umbrella of Kuwait Petroleum Corporation (KPC) and a part of the K companies.
It will be a heavy and challenging task for the company to complete and fulfill its objectives within four to five years, most importantly completing the Al-Zour Refinery with a production capacity of 620,000 barrels per day. This is for replacing the closed-down Shuaiba Refinery but with almost three times its capacity to meet the local demand for electricity and use the additional units to export finished products to the world.
The refinery will run on heavy Kuwaiti oils to ensure a profitable margin for this type of crude oil rather than selling it overseas at giveaway prices.
Establishment of the liquefied gas import facility could be an easier task to complete on time in line and made it environment-friendly. It could prove to be cheaper than utilizing our oil resource. It will also be cheaper to import gas in the long run, considering we are surrounded by gas-rich countries, or we could import shale gas from USA.
The petrochemical complex, as an addition to the refinery, is a must to improve the refinery economics and returns. However, KIPIC cannot run alone without a foreign partner.
This is the truth that we have to face. Without huge expertise in the petrochemical field, Kuwait will neither expand and excel in this field nor find another source of income besides oil.
Frankly, we should have invited international companies in this huge challenging project to ensure success, smooth running of operation and, most importantly, completion on time. But alas, this will not be the case and we are bound to remain behind our neighboring oil companies.
We do trust in our national potential in running our industries, but new ideas, and new technology and knowhow from the masters of the industry will only add value and offer more eye-opening methods which we have been lacking since the nationalization of our industry in 1975.
Let’s bring back the good habits of the 1960s and private joint-venture companies.
By Kamel Al-Harami
Independent Oil Analyst