If KPC splits its 10 ‘K’ subsidiaries, will it be better for the Kuwaiti oil industry?

23/08/2025

If KPC splits its 10 ‘K’ subsidiaries, will it be better for the Kuwaiti oil industry?

This is a very theoretical assumption, yet it is in the right direction. With more decentralization, the chief executive officer (CEO) will be given the space and time needed to oversee the overall performance of all 10 ‘K’ oil companies -- each with diverse activities such as upstream, downstream, refining, shipping, gas imports, marine agency services, daily administration and more. There are also surprises, unexpected incidents and accidents in any of the facilities of Kuwait Petroleum Corporation (KPC) that require full attention. The CEO is often tied up with daily meetings in and outside the KPC headquarters.

Even with four or five deputies, it remains difficult to exercise full control under our classic system, which relies heavily on hands-on management of nearly every detail. This is in addition to answering calls from various members of Parliament, often regarding ‘wasta’ to hire or recruit friends, relatives or cousins -- even now, in the absence of Parliament. Perhaps, with decentralization, each company and subsidiary will become more efficient -- hopefully -- by taking on active responsibility. The idea of splitting KPC is to make it more core-focused, allowing it to concentrate on its essential activities without interference. This will also allow the companies to operate more independently, without constantly looking over each other’s shoulders. The concept of splitting KPC is not new.

Before 1975, Kuwait’s oil industry consisted of various independent oil companies, each serving a specific function. Kuwait National Petroleum Company (KNPC) handled refining, Kuwait Oil Tanker Company (KOTC) took care of shipping and Petrochemical Industries Company (PIC) led the petrochemical business. Other ‘K’ companies managed aviation, lube oil, marine shipping agencies and overseas downstream investments, including crude oil and gas exploration outside Kuwait. The time has come to separate them again from KPC -- possibly as a first step toward selling and privatizing non-core oil activities.

The main intention is to reduce full government control, as many of our oil companies were originally fully or partially owned by the private sector. For example, KNPC once had 40 percent private shareholders, and our oil tanker and petrochemical companies were initially created and owned by private local merchants. Therefore, we do not lack experience in converting most of the KPC subsidiaries back to their roots as independent, privately owned companies. This move could prepare the non-core oil companies for eventual privatization. Meanwhile, the core oil companies -- such as Kuwait Oil Company (KOC), which is responsible for exploration and discovery of crude oil within the State, and the international marketing arm handling the sale of crude oil and petroleum products -- could remain under State control.

The rest of the industry could be easily privatized and sold to the private sector or handed back to their original creators and investors. By privatizing and selling most of our non-core oil businesses back to their original founders, we can return full business responsibility to them, while the State generates massive revenues. This will also unburden the government from non-core operations. Definitely, it may seem like wishful thinking, but it could become a reality. This model will almost certainly work better for Kuwait’s oil industry and allow it to excel, becoming competitive both locally and internationally. Let us consider the performance of our local banks, some of our private oil companies, and other commercial entities. Kuwait is not short on creativity and hard work, it only lacks an open opportunity. Our history in pearling and trading is not far behind us. Will the privatization of our oil industry come to us soon?

By Kamel Al-Harami
Independent oil analyst
Email: [email protected]