What role does PIC play in Kuwait's oil and gas sector, and the 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 KPC's downstream subsidiaries, we use feedstocks 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. EQUATE is 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 annually almost 5 million tons of petrochemicals such as polyethylene, ethylene, and ethylene glycol, which are sold throughout the Middle East, Asia, Africa, and Europe.
In what way is PIC investing in Kuwait, and which areas show the highest potential for returns?
PIC primarily engages in R&D through our joint ventures. When developing a new business or plant, we favor joint ventures with companies that have considerable R&D experience. It is important that when we enter into agreements with companies, we include clauses about possible future collaboration on R&D innovation. We also participate in KPC-sponsored R&D activities. We sit on the KPC Solar Energy committee. We hope to contribute to the Kuwaiti objective of having 15% of domestic energy consumption come from renewable energy. Part of the mission of KPC and PIC is to add value to hydrocarbons in Kuwait. Gas or naphthalene as a feedstock may be worth $800 per ton. If we convert those feedstocks into petrochemicals, their worth can increase nearly threefold. Our Kuwaiti operations specialize in olefins, aromatics, and fertilizer. 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 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 are also seeing petrochemicals play a vital role in achieving sustainability goals. Plastics are being used to replace components in cars that traditionally were 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.