03/05/2025
03/05/2025

Furthermore, investing over $640 million in a venture in China, which is KPC’s first direct investment in that market, solely to market one product, naphtha, raises several concerns. Naphtha is not a competitive feedstock compared to natural gas, which is widely recognized as cheaper, cleaner, and more economical for petrochemical production. This casts doubt on the main purpose of the investment. If the purpose is not limited to using or selling naphtha, then the investment appears to be more financial in nature than operational. However, KPC is not lacking in experience or capability when it comes to marketing millions of tons of naphtha globally.
This brings us to another notable development in the oil industry: Shell Oil International has decided against fully acquiring another major oil company, BP. Despite BP’s underperformance compared to its industry peers and its urgent need for restructuring to regain its position among the “Seven Sisters,” Shell chose to walk away from the idea. Such an acquisition would have taken more than two years to properly integrate into Shell’s overall system, requiring a complete reorganization, significant time and effort, and a strong focus on manpower reduction and costcutting in all areas. Instead, Shell chose to focus inward by streamlining its own operations to be more closely in line with the structure and efficiency of its American oil industry peers. Investing in petrochemicals is, in principle, a good strategy. However, what are the overall benefits and strategic advantages for KPC? We hope that selling a few hundred thousand tons of naphtha is not the main purpose behind such an acquisition, especially at such a high cost.