Gulf NOCs need to focus on integration of value chains
07 Nov 2017 - 3:10
GCC states must increase their investment in value-added oil and gas processing to support sustainable, long-term economic growth, one of Kuwait’s leading industry executives said yesterday.
Kuwait’s petrochemical producer and international joint venture investor EQUATE’s President and CEO Mohammad Husain said better integration of upstream, midstream and downstream sectors of the industry must be a priority for national oil companies (NOCs).
This would ensure that countries with significant oil reserves continued to receive the greatest possible benefit from their natural resource.
“Historically, downstream industries in the Gulf have been relatively underdeveloped,” Husain said. “Exports from the region itself were generally as crude oil, with value adding taking place outside the regional economy. However, over the last two decades, the region has emerged as a global hub for the production of chemicals and petrochemicals, and the industry has been on a consistent and exponential expansion drive, growing at an average compound annual growth rate of 12 percent.
“As the global market for oil, gas and petrochemicals further evolves, we need to bring more of the processed value of petroleum products within our own economy as means for greater diversification and industrial presence. This has become a high priority for Gulf NOCs.”
For more than 30 years, Kuwait has consistently used downstream investments to increase the value of its petroleum resources, operating a group of interlinked companies under the umbrella of the Kuwait Petroleum Corporation (KPC), including oil production, refining, shipping and petrochemicals.
EQUATE is a key part of these investments, 42.5 percent owned by KPC subsidiary, Petrochemical Industries Company (PIC), in a partnership with US-based Dow Chemical Company with an equal stake. Currently, EQUATE is the world’s second largest producer of ethylene glycol, which is used in a variety of applications including polyester fibres.
Another subsidiary of KPC, Kuwait Petroleum International (KPI), has refinery investments in Europe and Asia, supplies around 4,000 retail fuel stations, most under its own Q8 brand, makes direct sales of fuel and heating oil to retail and industrial customers, is a major supplier of diesel to the road transport industry, and a significant supplier of aviation fuel at about 40 airports worldwide.
KPC is now increasing its investment within Kuwait and the GCC. The under-construction $16bn Al Zour refinery will be a 615,000 barrel per day ultra-modern facility, to be operated by the recently formed subsidiary, Kuwait Integrated Petrochemical Industries Company (KIPIC).