What role does PIC play in Kuwait's oil industry and overall economy?
We are the petrochemical industry arm of Kuwait Petroleum Corporation (KPC), one of eight subsidiary companies of the corporation. The subsidiary companies operate both in upstream exploration and the production of oil and gas, as well as further downstream petrochemical refinement all the way to direct sales of gasoline to consumers. PIC makes significant contributions to Kuwait's economy, through our own operations and through the operations of our nine joint ventures. Currently, 70% of the petrochemical products in the PIC portfolio are produced in Kuwait. The main chemical products include fertilizers, olefins, and aromatics. As one of the KPC's downstream subsidiaries, we use feedstock such as ethane and naphtha to make olefins and aromatics. These petrochemical products are used even further downstream in markets as diverse as agriculture, textiles, plastics, paints, cosmetics, transportation, and many other areas. Including our joint ventures, we have operations in five countries, and we are looking to expand to India, China, and the US. These joint ventures are key to our growth strategy, enabling us to diversify our product offers and leading to expansion into global markets. PIC now has a marketing presence in nearly every region of the world. Take EQUATE as an example of the scale and reach of our joint ventures. EQUATE is a joint venture with PIC, The Dow Chemical Company, Boubyan Petrochemical Company, and Qurain Petrochemical Industries Company. Its world-scale manufacturing facility produces almost 5 million tons of petrochemicals such as polyethylene, ethylene, and ethylene glycol per year, which are sold throughout the Middle East, Asia, Africa, and Europe.
Where are the key markets for your products around the world?
Asia is our biggest market, and demand for our products is at its highest in India and China. We export urea fertilizer to North America and South America. Demand is also increasing in Europe, especially in Turkey. We also have sales operations in North Africa, Egypt, and Morocco.
What are your major projects currently under development?
The major projects on the horizon for PIC in Kuwait are Olefins III and Aromatics II, which will be integrated with the Al-Zour refinery. We are currently at the pre-feasibility stage of this project. Internationally, PIC is exploring projects in India, the US, China, South Korea, and Bahrain.
What is the outlook for the long-term demand of petrochemical products?
Over the coming decades, petrochemicals will continue to play a significant role in meeting the demand for consumer products among a growing middle class. The majority of this demand growth will be in the developing world, and our location in the Middle East positions us well to serve fast-growing markets in Asia, Africa, and Eastern Europe. More and more, we also are seeing petrochemicals play a vital role in achieving sustainability goals. For instance, plastics are being used to replace components in cars traditionally made from steel. Plastics make cars lighter, and lighter cars tend to require less fuel. PIC is on a journey to become a global player in petrochemicals. We will continue to invest in petrochemical growth, as we also continue to seek ways to make our operations more environmentally sound.
Are you investing in R&D?
PIC primarily engages in R&D through its joint ventures. When developing a new business or plant, we favor JVswith companies that have considerable R&D experience. It is important to us that, when we enter agreements with companies, we include clauses about possible future collaboration on R&D innovation. We also participate in KPC-sponsored R&D activities. For example, we sit on the KPC Solar Energy committee. We hope to contribute to the Kuwaiti objective to have 15% of domestic energy consumption come from renewable energy.
How are you investing in Kuwait? What areas do you see as having high returns for PIC in Kuwait?
Part of the mission of KPC and PIC is to add value to Kuwaiti hydrocarbons. For example, gas or naphtha as a feedstock may be worth $800/ton. If we convert that feedstock into petrochemicals, its worth can increase nearly threefold. Our Kuwaiti operations specialize in olefins, aromatics, and fertilizer. As stated earlier, we are investing in two major projects, Olefins III and Aromatics II. Integrating these facilities with the Al-Zour refinery is in a prefeasibility study stage. This is a collaborative effort with KNPC. We anticipate this operation will add approximately 2 million tons a year to our output.
What impact will this integrated complex have on the economy once it's finished?
The first impact will be on job creation, and not just within our direct pool of employees, but also across the supply chain. KNPC is building a 600,000bbl refinery, which is hugely significant. We want to ensure that we add value to that operation. It's interesting to note that for every job created in the petrochemicals sector, approximately 4.8 additional jobs are created in other sectors of the economy.
How does PIC contribute to the community and environment in Kuwait?
PIC makes significant contributions to both our communities and to protecting the environment. As environmental, social, and economic challenges in our world grow, the definition of business performance is expanding. At PIC, we understand that financial results are not the sole consideration. A commitment to ensuring the long-term sustainability of our company, community, and country is also essential. From a community perspective, PIC adds employment opportunities in Kuwait. We also sponsor initiatives in collaboration with other businesses and universities in Kuwait to help foster the next generation of leaders. These include scientific research competitions to develop the future engineers to mentoring projects for young entrepreneurs. And certainly, the environment is a priority of ours. In 2013, PIC launched the 2017 PIC Sustainability Goals. Among these ambitious five-year goals are objectives to reduce energy and water use, and greenhouse gas emissions, which can contribute to climate change. We have also been working to increase environmental awareness amongst the public. Our largest community initiative is the Kuwait Green Wall. This project was founded by PIC, Kuwait Energy, and the Environmental Voluntary Foundation, whose organization, Kuwait Oasis, manages the project. Additional partners who have joined the project include Kuwait Environment Protection Authority, the Kuwait Ministry of Interior, Nathan's Famous, and VIVA Telecom. Over a 10-year period, the project will plant 315,000 trees along 420m of the Kuwaiti border. PIC arranges day trips twice a year for PIC employees and students to plant the trees. It has been popular with the students, who feel they are making a difference. We hope their involvement in the Green Wall will increase their environmental awareness for the future as well as bring environmental benefits to Kuwait such as improved air quality, mitigation of airborne sand, and increased biodiversity in the areas of plantings. Many of PIC's senior leaders, including myself, have helped plant trees. Another environmental project we are involved in is a beach cleanup, again with local NGOs and students.
What are your expectations for PIC in 2016?
We want to become a major, global player in the petrochemical industry. We will continue to pursue our growth strategy built on strategic partnerships. We also aim to achieve the maximum market share for our products and encourage downstream industrial growth. With KPC, we are planning to develop a value park in Kuwait to encourage the establishment of smaller entrepreneurial factories and small- and medium–sized enterprises (SMEs). We hope our involvement with the value park will encourage small companies to create products such as clothes and plastics used in our daily lives. It is hoped this will add further value to Kuwaiti hydrocarbons.
© The Business Year - June 2015