Kuwait’s ambitious plan to open the Oil Sector to International Oil Majors
His Highness the Amir of Kuwait Sheikh Jaber Al-Ahmad Al-Sabah has appointed a new Supreme Petroleum Council (SPC), the State’s highest oil decision-making body, to oversee an ambitious plan to open the
sector to oil majors.
The SPC is headed by the First Deputy Premier and Foreign Minister Sheikh Sabah Al-Ahmad Al-Sabah. In addition to the nine appointed members, the Ministers of Oil, Finance, Electricity and Trade, and the
Governor of the Central Bank of Kuwait are also part of the Council.
In recent months, the SPC and a sub-committee have been reviewing a final model for “Project Kuwait” to allow foreign firms to operate northern oilfields for the first time since fully nationalizing the vital sector in 1980. Most of the work has already been done by the previous SPC and the new SPC will be taking another look at the works done so far.
A law governing the issue is already on the Parliament’s agenda for quite some time.
Kuwait, which sits on almost 10 per cent of the world’s oil reserves, has an OPEC quota of 1.741 million barrels per day (bpd). Its production capacity stands at around 2.5 million bpd but it hopes to boost it to over 3 million bpd with the majors investing some $ 7 billion in the northern project.
Kuwait Cabinet to finalize War Emergency Plan
The Kuwaiti press has reported that the Cabinet would be given a briefing on the final emergency plan formulated by various Government Ministries and institutions in case the US launches an attack on Iraq.
A decision would be issued soon to implement the said plan and assign the concerned institutions in training their employees to adopt security and safety measures in case of any eventuality.
The Cabinet will also be informed that there are one million gas masks at the State’s warehouses and private companies to protect the people from any chemical attack.
These companies would provide citizens and expatriates with these masks at reasonable prices.
Sources pointed out that the plan also includes the provision of food supply that would last for more than six months. The bags of blood at the Blood Bank would be doubled to face any emergency.
Meanwhile, the Interior Minister would brief the Cabinet about the steps to be taken in this respect by the Interior and Defense Ministries to defend the country in case US attacks Iraq..
Bill to implement Kuwaitization
The Cabinet has recently discussed a draft bill on the percentage of national workforce that the private sector should employ. The bill includes a provision on the percentage and the fines to be imposed on private companies on their failure to follow the articles stated in the law.
Sources disclosed that the Economic Committee has noted that banks should include 29 per cent nationals as part of their staff whereas the telecommunication sector should have 37 per cent. Other sectors have to employ 1 to 20 per cent nationals for their work force.
Private Sector hosts 678,000 expats
According to a press report, there are 678,831 expatriate workers in the private sector. Citing sources from the Ministry of Social Affairs and Labor, the press report said that the ministry has issued 29,801 work permits in the second quarter, while the number of work visas issued during the same period reached 20,912.
Huge Increase in Budgets for Major Projects
Kuwaiti press has reported that the budget outlay for projects for the year 2002-2003 was $ 2200 million and the estimated outlay for 2003-2004 is $ 2500 million representing an increase of $ 300 million as a result of the 5-year plan projections.
A meeting of the High Commission for Planning was held recently, wherein the Commission reviewed the selection of Consultants for the Bubiyan Island Project.The selected consultant is expected to take two years to study the various options for the project.
The meeting also reviewed the Al-Subiya Bridge project and there was also a proposal for the bridge to link Failaka through a man-made island.
OPEC hits at Osaka Rollover
With the oil price already unnaturally high due to the threat of military action against Iraq, market eyes are becoming more closely focused on the upcoming OPEC meeting in September. While a number of
members have indicated their intention to defend the high oil price with a rollover of existing quotas, others in the organization have hinted at support for an output increase.
Key OPEC producers Kuwait and Venezuela have spoken out in favor of renewing the existing stringent quotas that have been implemented since the start of the year. Despite producing an estimated 1.7 million barrels a day more than the quota in July, the organization’s official production cuts have been the major factor in propelling the oil price from less than $20 a barrel of benchmark Brent crude in early January to $28 a barrel in late August.
However, signs emerging from the organization are far from uniform. OPEC President Rilwani Lukman affirmed the Organization’s ability to prevent prices rising too high on 26 th August, saying that OPEC could easily raise its production. The comments were widely interpreted as evidence that a decision is still a long way off. Nigeria is understood to favor an increase in production, and has made public its ambition to increase its own quota.
Key producers Iran and Saudi Arabia have yet to hint at their intentions, contenting themselves with vague affirmations that OPEC will cover any oil market shortfall in the event of a US military strike against Iraq.
The likelihood of such developments seemed to increase dramatically in late August when US Vice-President Dick Cheney said in a speech on 25 th August that Iraqi President Saddam Hussein must be removed by dint of force. His comments, the most belligerent yet from hawks in the administration, were supported by US Defense Secretary Donald Rumsfeld’s 27 th August insistence that the US could carry out an offensive alone. Cheney’s comments put more upward pressure on the oil price, which was already at 18-month highs.
Forthcoming Projects in Kuwait
1.
Bids under study for BOT Project:
Bids are under study at the Public Authority for Industries(PAI) for its first Build-Operate-Transfer (BOT) Project. Seven local companies their bids. Burhan Kuwait Trading & Contracting Company has submitted a low bid of $ 22.3 Million for the contract. Its price is about 0.4% lower than the next offer of $ 22.4 Million, submitted by United Gulf Construction Company.
The Project calls for Design, Construction and Maintenance of 38 kms of roads, using at least 65,000 tonnes of asphalt and kerbstone,12 kilometers of storm water drainage, a 11-km long sanitary network and a 14-kilometer water supply network. The project will provide facilities for 458 industrial plots and will take two years to complete.
The successful contractor will transfer the facilities to the PAI after five years.
2.
Bids opened for Subiya Package:
China Genzhouba Construction Group Corporation for Water Resources & Hydropower has submitted a low bid of $ 106 Million for the C-1 package on the proposed Subiya Water Storage and Distribution Scheme. Its offer is about 3% lower than the next price of $ 110 Million submitted by Egypt’s Arab Contractors (Osman Ahmed Osman & Company).
The C-1 package covers the construction of a water complex with three 55 million-gallon-a-day underground reservoirs, blending and water treatment facilities and pumping stations. It also involves site preparation, construction of access roads, an administrative building, related infrastructure and landscaping.
The 30-month Water Storage and Distribution Project is being tendered in four packages.
The client is the Ministry of Electricity & Water, which has extended the deadline until 10 Sept. 2002 for the submission oif bids on the C-3 package.The Contract covers the installation of a 53 km, 1.2m diameter pipeline which will supply water from Subiya to Mutla.
The Consultant for the estimated $ 467 Million scheme is Binnie & Partners (Overseas), part of the UK’s Black & Veatch. Water will be supplied into the network from the proposed Subiya Distillation Plant (see next page).
