What was the vision behind the creation of KIPIC in 2016?
The downstream sector is an important part of the 2030 strategy of maximizing the value of hydrocarbons in Kuwait. The Al Zour Refinery has been approved and is now under execution, and an LNG import terminal (LNGI) is part of the 2030 strategy for supply of clean energy to Kuwait's industrial and power sector. After a study, KIPIC was established in late 2016 as an integrated company to manage the integration between refining and petrochemical activities to gain synergies and maximize the value of hydrocarbons. KIPIC was initially mandated to construct and operate three mega-sized projects at Al Zour: the Al Zour Refinery, LNGI, and downstream petrochemical production facilities. Ensuring that these three megaprojects are as integrated as possible is the essence of this company despite the fact that these projects were approved and are being implemented on different time schedules.
How has the organization evolved since it was founded over a year ago?
The process of establishing the legal entity was finalized in November 2016. Considering the size of the company, the time it took to finalize all the necessary legal steps was short and commendable. Once the legal entity was established, we needed to determine the organization structure of the company and its vision. This was approved in November 2016, along with the appointment of the board and the management. We had to be absolutely sure we were ready to assume responsibility because the last thing we wanted was to hinder the progress of the ongoing projects during the transition to KIPIC. We developed a detailed plan that ensured a smooth transfer of responsibilities without interruption. This plan saw to it that by May 2017 the foundation and systems would be in place to have everything transferred to KIPIC, and it is heartening to note that all went according to plan. Before the establishment of KIPIC, the progress of Al Zour Refinery was around 15%, and now it is around 42%. LNGI progressed from 12 to 20%. Things are also moving forward with the petrochemical project. The company faces many challenges in terms of the resources to be brought in and the right systems to be established. Things are now moving according to plan and I hope that by 2018 that many of the well-detailed systems that are needed to equip the company will be in place.
What are the advantages of integrating refining and petrochemical activities?
The ultimate goal is to maximize the value of Kuwait's hydrocarbon assets. We enhance the margin of crude oil by refining it. These refined products can be used as feedstock to produce petrochemical products such as polypropylene, p-Xylene, benzene, and so on to increase the margins even more. The integration of refining and petrochemical activities leads to important synergies. It ensures that we do not seek for profit maximization in isolation, but rather, look for the approach for maximized profit across the value chain and help us achieve the greatest margins. By having everything under one umbrella, we will save on investment and reduce our operating costs.
How do you see KIPIC contributing to the future of Kuwait and generating employment opportunities?
Our growth programs will tap into Kuwait's many strategic goals. Maximizing the value chain of crude will be a great resource for the economy of Kuwait, and the investments in the three megaprojects will create a positive environment for many industries and raw materials. Moreover, it will create 2,700 direct employment opportunities, as well as the jobs that are available for contractors and maintenance. The investments will provide an avenue for the private sector to be involved in the downstream industry. In addition, we will supply the country with clean and high-quality fuel that will help reduce the impct on the environment. Together, these points make up KIPIC's contribution to the future of Kuwait.