Kuwait Petroleum Corporation (KPC) intends to soon embark on the process of reorganizing its organizational structure to ensure higher efficiency and enhanced ability to compete with international oil companies. According to local media, this process is in its final stage, and is pending the final approval of KPC board.
The whole idea is to merge the current K companies, which are about ten in number, into four or five large companies of similar activities.
Even though this concept is part of the current structure of KPC, interferences of various groups with lack of vision and effective leadership have led to mixing up of various activities. This further led to creation of companies with new top positions up for grabs.
KPC can bring the same order back through well-established main oil activities— exploration and production of crude oil, refining and petrochemical marketing, and the rest of the K companies can fill in to follow each activity.
Creation of the latest K company, Kuwait Integrated Petroleum Industries Company (KIPIC), for dealing with three different activities — Al-Zour refinery, petrochemical and gas import terminal – was not required as these three activities can be managed by well established companies namely Kuwait National Petroleum Company (KNPC) and Petrochemical Industries Company (PIC).
Al-Zour Refinery was originally under KNPC, but for some unknown reason, it was taken away from KNPC for forming the new company KIPIC. Based on the new proposal, it will go back to its core activity of refining; so why invent the wheel again?!
Therefore, all refining activities of KPC should be managed by KNPC including the Al-Doqum refinery in Oman.
Kuwait Foreign Petroleum Exploration Company (KUFPEC) should be part of Kuwait Oil Company (KOC)’s upstream activity as it was in past, if it is not privatized or sold, which is what should have been done in the first place.
Similarly, the oil transportation company, Kuwait Oil Tanker Company (KOTC), should have long been privatized and sold. This is because marine is no longer a core part of international oil activities, as can charter oil tankers on long term basis in line with other oil companies.
KPC should not think or believe that changing the structure is sufficient to enable it to compete with its peer group. KPC should improve from the inside by enhancing the productivity and efficiency of its employees instead of carrying out just a simple facelift surgery.
There is nothing wrong with the current structure or organization. KPC should conduct a study to measure its internal performance in terms of performance, productivity, and efficiency in comparison with its peer companies in the region.
By Kamel Al-Harami – Independent Oil Analyst