New Board Of Directors For KPC
The Minister of Energy, Government of Kuwait has constituted a new Board of Directors for Kuwait Petroleum Corporation (KPC). The new Board of Directors shall be as below:
1. His Excellency Sheikh Ahmed Al-Fahad Al-Sabah
(Minister of Energy and Chairman of KPC)
2. Mr. Hani Abdelaziz Hussein
(Deputy Chairman)
3. Mr. Abdullah Hamad Al-Roumi
(Managing Director for Transport & Board Chairman for Kuwait Oil Tanker Company)
4. Mr. Ahmed Rashid Al-Arabeid
(Managing Director for “Kuwait” Project in addition to his coordination duties on Privatization Projects, Research & Development)
5. Mr.Saad Ali Shuwayyib
(Managing Director for Petrochemical Industries and Board Chairman of Petrochemical Industries Company)
6. Mr. Jamal Abdelkhale q Al-Nouri
(Managing Director for International Marketing)
7. Mr. Sami Fahad Al-Rashied
(Managing Director for Refineries & Local Marketing and Board Chairman of Kuwait National Petroleum Company)
8. His Excellency Sheikh Talal Khaled Al-Sabah
(Managing Director for Petroleum Services)
9. Mr. Farouq Hussein Al-Zanki
(Managing Director for Production & Explorations and Managing Director of Kuwait Oil Company)
10. Mr. Khalid Saleh Buhamrah
(Part Time Board Member)
11. Mr. Abdelmalik Mohammed Al-Gharaballi
(Part Time Board Member, Energy Undersecretary for Oil Affairs and Representative for the Ministry of Finance.)
OPEC Statements push prices to record levels
Oil prices have been fluctuating in the past decade;however, due to terrorist warnings in the US, these prices have ballooned exponentially in the first week of August 2004. Furthermore, another pipeline attack in Iraq did not help to curtail warnings from some alarmists within OPEC. As of 2nd August 2004, OPEC’s price has reached its highest record of $ 39.04 per barrel of crude oil.
Mr. Purnomo Yusgiantoro, OPEC President and Indonesian Energy Minister appears to be on a mission to inflate oil price, breaking with months of OPEC tradition of insisting that speculation rather than fundamentals are to blame for the bull market. In late July 2004, he questioned OPEC’s ability to raise production significantly for a short term. He argued the need to boost members’ spare capcity. Saudi Arabia refuted the statement and claimed that the Kingdom would produce 9.5 millions barrels per day (b/d) in August and could swiftly raise its output to 10.05 million b/d if necessary. Yusgiantoro, however, was undaunted by these OPEC heavyweights claims.
On August 3rd, he stated, “The Petroleum & Mineral Sources Minister has said that Saudi Arabia can increase production – but they cannot do it immediately. The oil price is very high, it’s crazy. There is no additional supply”.
Compounding the effect of his words were concrete threats to supply. In Iraq, the Kirkuk-Ceyhan export pipeline was attacked yet again on 3rd August, cutting off exports from the northern fields. On the other side of the world, the threat of terrorism in the US added upward pressure to the prices. On 1st August, the White House raised its terrorist alert to orange, the second highest level, on the grounds of intelligence suggesting threats to major US financial institutions, including IMF, the Work Bank, the New York Stock Exchange and the headquarters of Citigroup.
Potentially adding a downside to prices, but failing to do so, was a statement from Russia’s Justice Ministry denying that Yukos had been banned from selling oil – reportedly part of an asset-freeze by the authorities as they attempt to claw back tax dues. “No banning measures have been made in connection with the production, refining, transport and sale of oil,” the ministry said in a statement. Assertions to the contrary produced a price spike in late July.
US Stock figures released on 4th August were contradictory. Crude inventories fell marginally to 298.6 million barrels. But gasoline registered a build unusual for the season, climbing by 1.2 per cent to 210.7 million barrels. “in itself (the build) is extremely bearish, as builds should not be happening this stage of the driving season”, says Paul Horsnell, Analyst at Barclays Capital. “This is very weak Gasoline data, but perhaps
not quite as bearish as the headline figure might suggest…. The demand side for gasoline remains very robust on the data as it stands”.
(From MEED 6-12 Aug.2004)
Courting the Private Sector
There is a new romance blossoming in Kuwait. The Private Sector – long neglected – is being wooed once again by the Government of Kuwait. The advances come in the form of carefully worded “Invitations to bid” for the developer role on major infrastructure projects.
So far the Private Sector has been demure in response.A deal was eventually struck for the Build-Operate-Transfer (BOT) contract on the Sulaibiya Wastewater Treatment Project in 2002. But since then there has been more talk than action. The international private sector has been enticed by PROJECT KUWAIT – the $7000 million program for the development of the Northern Oil Fields. However, the Government remains exasperated by the lack of progress on the Subiya Causeway. In February 2004, a seminar was held to discuss the BOT proposals for the 36-kilometer crossing, but the Ministry of Public Works was jilted: no serious offers were tabled.
The Government has now decided to deliver a step change to the relationship, one which could herald the beginning of a new economic order. The thinking runs that if the main barriers to private sector development are Kuwait’s bureaucracy and the political system, then the best response is to circumvent them. The result has been the empowerment of the Divided Zone Agreements & Kuwaiti Islands & Mega Projects Development Team (Dizart).
Transformation: “Dizart is actually the old name of a department set up in 2000 for projectrs in the Divided (Neutral) zone (with Saudi Arabia) and in the summer of 2002 responsibility for major projects and the islands was added”, says Dizart Deputy Chairman Anwar Abdul Rahman Al-Jawder. “But the real transformation came when an Amiri Decree changed its position from being a planning department into an executive arm. This has allowed us to avoid bureaucratic problems”.
Dizart is well viewed as a cell within the Government that has both the authority and the in-house capabilities to deliver rapidly on high profile projects. It carries sufficient weight to punch through inter-departmental conflicts but is itself slim enough to facilitate prompt decision-making. Success in delivering momentum to projects for the development of Divided Zone created the credibility that underpins Dizart’s expanding portfolio and status – the Chairman Jassem Al-Our, has ministerial rank. But it is the centralization of decisionmaking that is essential. “Clause 2 of the Amiri decree makes it clear that Dizart acts on behalf of all government agencies when it is pursuing project developments” says Al-Jawdar. From the perspective of the private sector, the government now speaks with one voice and has but one face.
There can be little doubt over the need for a government body with a focus on delivery. Kuwait’s bureaucracy has become the butt of cruel jokes; people talk of efficiency studies that found the productive working week of civil servants could be measured in minutes rather than hours or days.
Perhaps the most telling evidence can be found in the budget data. For a country in which the state sector accounts for more than 75 per cent of gross domestic product and the government employs the vast majority of national workforce, Keynesian models are familiar and the government has been committed to an
expansionary fiscal policy for some years. The problem – and it is one almost unique to Kuwait – has not been one of available resources, but the ability to spend them. Between 1999/2000 and 2002/2003, budget surpluses aggregating $16,000 Million were generated,in part the result of robust oil revenues but also a seeming inability to hit expenditure targets. Budgeted spending in 2002/2003 the most recent year for which full data is available, was set at $18,160 Million, but only $16,240 Million actually left the purse. Projects and maintenance expenditure came in at a mere 69 percent of budget.
“One of the main causes has been the swollen bureaucracy – it has been used as a sponge to soak up nationals entering the labor market”, says an Economist in Kuwait City. “Too many signatures and approvals are needed from too many people in too many offices before plans can be turned into action”. The expansion of Dizart’s portfolio might be one way to bypass the congestion.
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Failaka: Plans for infrastructure development are based on private sector investement |
The best measurement of the body’s measurement will be seen in the Failaka and Bubiyan Islands and the Sulaibikhat Beach Development Projects. The Failaka Island project envisages a $ 5,000 million developement encompassing the installation of full infrastructure and the building of hotels, chalets and a broad array of tourist facilities, while Buibiyan sees a multi-billion dollar Greenfield port development and free zone established that will act as the gateway to the northern Middle East.The Sulaibikhat project will call for the development of
18 kilometers of breachfront.
“Market statistics indicate that there are good prospects for encouraging investment companies into project development”, says Al-Jawdar. “And in Kuwait, there is also a change in direction. The political change in Iraq is very important and the clear aim of the Kuwaiti Government is to enter into the Global economy.These factors have given real interest to these projects.
For the Failaka project, 23 companies have been shortlisted for pre-qualification on what are expected to be three 20-year BOIT contracts. More than 40 submitted expressions of interest. This pre-qualification will be another milestone on what remains a hugely ambitious project.
The principle of Private Sector involvement is gaining wider acceptance. “There are no laws that stop Kuwaiti BOT investment” says Al-Jawdar. “In spite parliamentary objections in the past, the concept is established. And on the Failaka, Bubiyan and Sulaibikhat developments, there is no need for any new or additional government or parliamentary approvals.The blessing of the Council of Ministers has already been obtained and the initiatives are open for both international and foreign private sector investors. Previous BOP projects had constraints in processing and development because there was no single entity responsible for all elements. When Dizart is involved, this is not the case”.
The assumption is that steady progress on BOT developments in Failaka will be much appreciated by the Government and that new projects will expand Dizart’s portfolio.
“The main focus of our energy at the moment is on the Failaka Project: it is our first BOT initiative. We are expecting this experiment to establish the principle”, says Al-Jawdar. “We ill either prove ourselves or fail”.
(From MEED 30-Jul – 5-Aug 2004)
Two Visions of an Island Paradise.
Kuwait’s island development projects are a perfect reflection of the Gulf’s economic fas hions. The plan for Bubiyan is a logistics and infrastructure play, while the Failaka and Sulaibikhat developments are for tourism.
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Falaika: Shaping up for Tourism |
“The plans for Failaka are basesd on a specific and special vision”, says Anwar Abdul Rahman Al-Jawdar, Deputy Chairman of Dizart. “This island has big historical significance: it has monuments from Greek and Roman times, and the development is putting special focus on preserving this special character, the archaeology, monuments and the environment. We want to attract Kuwaiti, regional and international investors, and we want to attract tourists”.
The model sees the issuance of 20-year Build-Operate-Transfer (BOT) concessions on which the clock will start ticking after a five-year construction period. The estimated $ 5000 million initiative calls for a multifaceted development of tourism infrastructure on the 43-square-kilometer island: chalets, hotels and leisure and entertainment facilities are planned.
“We would prefer a single investor consortium, but the development could be divided into three packages or contracts” says Al-Jawdar. Dizart is the client, Al-Dabbous Engineering Consultants has drawn up the master-plan and Hill International along with its local joint venture partner SPDM are the construction and project managers. “Hill’s role is not just as a project and construction manager, but it includes reviewing the existing master-plan, suggesting best uses of the land and preparing an economic feasibility study”, says Raouf Ghali, Senior Vice President of Hill International.
Some 23 developers have been short-listed for prequalification.
Pre-qualification will be completed by the end of September 2004 and terms of reference will be issued in November, with a bid deadline of March 2005.
Contract awards are scheduled for late August 2005.
By this point, a clear picture should have emerged on the Bubiyan Island development. The toppling of Saddam Hussein’s regime in Baghdad has transformed Kuwait’s economic georgraphy; a dangerous and hostile enemy on its northern and western borders has been turned into a potentially lucrative business opportunity. Kuwait has the chance to return to its trading routes of the 1960-70s, when it was the gateway to the upper Gulf.
At the heart of the plan is an $ 850 million port development, studies for which have been worked on by Drewry Shipping Consultants and Mouchel, both of the UK, the local KCIC and the Kuwait Fund for Arab Economic Development. Preliminary proposals see a five-phase, 16-year development of what could be one of the largest commercial ports in the region. But there is more to the Bubiyan plan than just a port. Options under consideration range from the establishment of a free zone to the nurturing of a light industrial base.
The full shape of the Bubiyan development – which will have to take into consideration everything from environmental impact to the clearance of mines and the periodic flooding of a major proportion of the 860-square-kilometer land mass – will emerge over the coming few months. The local Gulf Consult and the US’ HOK are scheduled to complete a master-plan by August 2005, while Dizart and Hill International are due to produce detailed plans and business ideas before that.
(From MEED 30-Jul – 5-Aug 2004).
KOTC signs contract for four new tankers
The Kuwait Oil Tanker Company (KOTC) has signed a $ 360.5 Million contract with Hyundai Heavy Industries,Korea for the construction of four new oil tankers.
According to the KOTC Management, the company has embarked on a major fleet building project to modernize the existing ageing fleet, taking place in two stages –the first incorporating the construction of seven tankers,two crude carriers, two gas carriers and three product carriers. The second stage will be implemented gradually.
As per the contract signed, Hyundai Heavy Industries will design, construct and deliver four tankers to KOTC,including two crude oil tankers with a deadweight capacity of 317,000 tons. The Korean company will also design two large tankers for liquefied gas and ammonia with a capacity of 82,000 square meters.
The new tankers will reduce the average life-span of the fleet, thereby increasing its general efficiency and competitive opportunities in the international market.
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