Nizar Al-Adsani Kuwait Petroleum Corporation
Chief Executive Officer
Representative of His Highness the Prime Minister Sheikh Jaber Al-Mubarak Al-Hamad Al-Sabah, Minister of Oil and Minister of Electricity and Water Engineer Essam Abdulmohsen Al-Marzouq,
Mohammed Barkindo, Secretary General of OPEC
Your excellences, ministers and guests,
Ambassadors, and chief executive officers of oil companies,
It is my honor and privilege to welcome you all, and allow me to thank you for accepting our invitation to attend the 3rd Kuwait Oil & Gas Show and Conference; a special event that boosts cooperation and partnerships between oil and gas companies in face of the challenges that this industry witnesses. I wish you a happy stay in Kuwait.
We are proud that this important oil biennial event takes place under the patronage of His Highness the Prime Minister Sheikh Jaber Al-Mubarak Al-Hamad Al-Sabah, and appreciate his support to the oil industry which is the main source of the national economy.
The political leadership's limitless support has enabled the Kuwaiti oil sector to achieve several accomplishments and successes. Meanwhile, we strive to achieve more success in the coming period in order to cement Kuwait's strong global position, and achieve the vision of His Highness the Amir Sheikh Sabah Al-Ahmad Al-Jaber Al-Sabah.
I would also like to thank those who took part in preparing for this project, especially the KPI Engineers Society, Arabian Exhibition Management and committees that worked for a year to make this great gathering a success.
We made sure that the conference takes place under the theme "Shaping the Energy Future: Integration and Diversification".
As you are aware, the oil and gas industry is facing several challenges and changes that affect supply and demand, and thus prices in oil markets. Crude price levels remain around USD 50 a barrel, which contributed in making drastic changes in plans and strategies of oil producing countries, as well as national and international oil and service companies.
Among the challenges is also the fact that the transportation sector, which plays a key role in oil demand, is currently witnessing technological developments supported by governmental policies and legislations. Electric vehicles have become a real challenge to oil demand in the near future in light of the drop in their prices thanks to the technological advancements that this industry witnessed, its environmental advantages and governmental incentives in some countries. The market share for electric and hybrid vehicles is expected to reach around 6% by 2040, compared to 0.7% in 2017.
It is worth mentioning that in light of the international agreements, countries are racing to come up with environmental legislations to limit emissions and protect the environment. This puts us in front of a commitment to come up with necessary strategies to provide global markets with clean products in accordance with these legislations.
Meanwhile, the OPEC Secretariat predicts oil demand to increase to 35% by 2040 compared to 2015, and while fossil fuel represents the majority of the mix of energy, its share is predicted to drop from 81% in 2015 to 75% in 2040. In the meantime, oil will continue to have the largest share in the mix of energy despite its projected drop from 31% in 2015 to 27% in 2040.
To meet those challenges and changes, Kuwait Petroleum Corporation based its strategy for 2040 on growth, integration and diversification in the oil industry in a way that boost Kuwait's role in securing supplies to global markets.
In terms of upstream inside Kuwait, KPC and its subsidiaries concerned in this field are working on increasing the maximum crude production's capacity to 4 million barrels a day by 2020, while increasing the production of free gas to 1 billion cubic feet a day by 2023, and that through the execution of the following programs:
Building three early production units to increase the production capacity of free gas. The last of these units will enter service in January 2018. These facilities will increase Kuwait's production capacity of free gas to around 500 million cubic feet a day.
Launching two gathering centers north of Kuwait in March 2018.
Developing heavy oil from the Lower Fars Reservoir in Al-Ritqa Field, where facilities are set to become operational by May 2019. Around 60,000 barrels of heavy oil are set to be produced from this reservoir a day.
Increasing the number of towers used in drilling and maintenance of wells, which exceeded 130 towers during the fiscal year 2016/2017, with the goal of increasing them to 180 during the fiscal year 2019/2020.
Developing Jurassic gas fields north of Kuwait, which will help increase free gas production to 1 billion cubic feet a day by 2023.
Commencing the execution of the offshore drilling project in March 2018.
And as part of effort to expand in the upstream industry outside Kuwait, producing shares were acquired from Total in some oil and gas fields in Norway. Furthermore, commercial production started this month in the Wheatstone LNG project in Australia.
On the other hand, and if we look into the downstream sector inside Kuwait, we find that efforts are moving forward to execute strategic plans to produce environment-friendly fuels, thus boosting KPC's presence in global markets. The first unit is set to enter commercial operation in May 2018, to be followed by the remaining units.
And as part of KPC's strategies to provide more environmentally and economically suitable fuel to meet the Ministry of Electricity and Water's demands, efforts are ongoing to execute the new Zour Refinery project, which provides clean liquid fuel necessary for power plants and water desalination stations. The first unit of this project is set to enter operation in May 2019. Meanwhile, a project to establish permanent LNG terminals in Al-Zour is currently under construction. This project will help meet the local market's long-term demand on fuel.
As for downstream outside Kuwait, we started along with our partners the operation procedures of the Vietnam Refinery in integration with the petrochemical complex, with an operational capacity of 200,000 barrels a day of Kuwaiti oil. Commercial operation is expected to start in December 2017.
Furthermore, retail marketing started inside Vietnam with the strategic partner 'Idemitsu Kosan'. The first station carrying the 'IQ8' logo was opened this month.
Also, studies continue for the partnership project between Kuwait Petroleum International and Oman Oil Company to build a refinery with a capacity of 230,000 barrels a day Al-Duqm, south of Oman. The final investment decision is expected to be made before the end of 2017.
Reflecting KPC's commitment in petrochemicals, which it regards as a key pillar to its efforts to diversify sources of income and achieve added value, we in Kuwait are moving ahead with preliminary engineering studies to build and olefins and aromatics complex in integration with the Al-Zour Refinery. The project, which is set to be presented in March 2019, reflects our strong belief in the importance of achieving integration between refinement and petrochemicals.
And in terms of efforts of cementing our global presence, the project to build a petrochemicals' complex in the United States of America, which is being carried out in cooperation with Dow Chemical, is in its final stages of execution, while operation is set for early 2020. Furthermore, studies are currently ongoing to build a complex for aromatics in Bahrain jointly with the National Oil and Gas Authority (NOGA) of Bahrain. A similar study is also ongoing to carry out a petrochemicals project in Alberta, Canada. These projects reflect our commitment to moving forward in expanding in petrochemicals, because it is our future choice to guarantee achieving added value.
And as part of our plans to become a safe provider, we are working on building 8 tankers to transport crude oil, LNG and petroleum derivatives.
And to meet Kuwait's commitments towards the international community in terms of reducing emissions and protecting the environment, the oil sector has plans and programs to increase the utilization of renewable energy, such as establishing a solar power station in Al-Shaqaya that will be connected to Kuwait's electricity grid by the end of 2020. Meanwhile, the Sidra 500 project was launched to harness solar power in operating submarine electric pumps in Um Qudair field.
Taking care of human resources tops our priorities, because we believe that they are the basis for development, progress and innovation. Therefore, we at KPC exert efforts to attract and retain distinguished human resources by creating a working environment that guarantees a high level of job satisfaction and achieves loyalty. We also develop practices and applications related to qualifying human resources and leaderships, while improving performance and productivity by boosting general values at KPC, and particularly the culture of exceptional performance.
It is worth mentioning that the oil sector is considered attractive for newly graduates. KPC and its subsidiaries hired around 2,000 graduates last year, and around 5,000 are expected to be hired in five years. Meanwhile, service contracts are utilized with various international companies working in Kuwait in order to secure jobs for national manpower. Also, coordination is made with contracts to provide jobs for Kuwaitis in oil sector contracts.
The world requires developing all kinds of energy resources, and this is why we believe in the policy of diversifying energy resources on a gradual basis and based on economic feasibility and what serves a clean environment and achieves growth to our people.
The technological advancements in the past few years helped provide additional energy sources and using them in an active, clean and affordable way. The coming period requires us to invest more in research and development in fields that support oil and gas consumption, while developing them to become clean energies.
In conclusion, I would like to highlight the features of our future outlook which targets the following:
Growing and enhancing integration between the Kuwaiti oil sector's activities.
Improving the performance of our operations and rationalizing expenses in accordance with the international best practices.
Enhancing security of supplies to our clients and international markets.
Enhancing cooperation between producers and consumers in oil markets, while benefiting from available experiences and transfer data transparently to reach realistic expectations.
Acquiring advanced technology and training our national cadres.
Entering joint projects that achieve common benefit, and establishing strategic partnerships in promising markets.
In the end, I would like to thank the organizers for their efforts.
Thanks for listening.