Geopolitical pressures fuel calls for KPC privatization

These questions are important in view of the geopolitical tension in the region and its impact on oil production levels compared to before Feb 28, in addition to the suspension of Kuwaiti and Gulf oil exports. Oil expert Kamel Al-Harami told the newspaper that he supports the move of KPC to diversify its sources of income to mitigate losses due to the ongoing war in the region, the repercussions of which are still being felt in the economic landscape.

He suggested that the corporation should seize the opportunity presented by amending certain provisions of its founding law to move towards the privatization of some sectors unrelated to oil and gas exploration and extraction. He also emphasized the need to privatize five sectors to maximize profits, the first of which is the local refining sector. He said the Kuwait National Petroleum Company (KNPC), established in October 1960 as a public shareholding company jointly owned by the Kuwaiti government and the private sector, initially had 60 percent government stake and 40 percent private sector stake until it became wholly government-owned in 1975.

He asked about the hindrances to the private sector’s participation in Zour Refinery, Mina Al-Ahmadi Port and Mina Abdullah Port, especially since KNPC does not fully own its overseas refineries. Kuwait holds 50 percent stake in the Duqm Refinery in Oman, 35.1 percent stake in the Nghi Son Refinery in Vietnam (in partnership with international companies), and 50 percent stake in the Milazzo Refinery in Italy (shared equally with another company -- the Italian company Eni. He is surprised that foreign companies are allowed to participate in the overseas refining sector of Kuwait, while the Kuwaiti private sector is denied the opportunity to participate in local refineries.

He said the private sector has substantial capital, enabling it to support the budget of the corporation during crises. He argued that allowing the private sector to enter the refining sector will lead to a significant boom and that this sector will share the burden of employee salaries with the government. He pointed out that KPC could also expand its overseas refining operations, particularly in countries that import Kuwaiti oil. Regarding his second proposal, he stated that it involves privatizing the fuel marketing sector (gasoline).

“This will put all fuel distribution stations under the responsibility of the private sector, while KNPC and Kuwait Petroleum International (KPI) will be solely responsible for manufacturing, refining and managing the three major refineries in Kuwait, or the overseas refineries owned by KPI on behalf of KPC.” He added. His third proposal is the privatization of the management of gas cylinder filling plants bearing the logo and name of KNPC, instead of Kuwait Oil Tanker Company (KOTC).

He wondered why the Umm Al-Aish and Shuaiba gas cylinder filling plants were not handed over to the private sector, so KNPC could focus on managing refineries, especially since it already assumed responsibility for the Zour Refinery after the merger with KOTC. His fourth proposal is the privatization of KOTC, which owns a vast fleet of tankers, considering the private sector previously owned 100 percent of KOTC. His fifth proposal is privatizing the petrochemical sector, indicating that the private sector, either through partnerships or independently, already owns successful petrochemical projects. “Therefore, this sector should be privatized, so KNPC can concentrate on developing production. If KNPC wishes to expand its refining,