Jan. 11, 2016


Hashem S. Al Hashem

Kuwait

Hashem S. Al Hashem

CEO, Kuwait Oil Company (KOC)

"KOC is implementing a comprehensive capital investment program for the next five years."

BIO

Hashem S. Al Hashem is the CEO of Kuwait Oil Company (KOC), a position he has held since May 2013. A recognized leader of the oil and gas industry, he has directed a variety of key initiatives across KOC, achieving an expansion of the company’s reserves and production to unforeseen levels, with his engaging vision, commercial rigor, and a demonstrated project delivery excellence. He joined the firm in 1987 and has held a variety of different positions. He also serves as the Chairman and Managing Director of the Kuwait Oil Tankers Company (KOTC). He has a Bachelor of Science degree in Chemical Engineering from Kuwait University and is an active member of the Society of Petroleum Engineers (SPE).

What have been the key achievements at KOC over the year 2015?

KOC has made significant achievements in 2015 on our path toward the 2020 production capacity target of 3.65 million bpd. We have increased production capacity by more than 240 million bpd through an extensive production optimization program. In a significant milestone achievement, we are proud as well to have signed the first heavy oil contract in KOC's history, in January 2015, for the construction of a central facility that will handle production from the Lower Fars reservoir in Kuwait. After its commissioning in 2018, heavy oil production from this reservoir will reach 60 million bpd. We have also successfully commissioned the new Gathering Center 16 in West Kuwait, which will support our goals of maintaining production capacity in this area. We have begun an intensification of our exploratory program, resulting in the discovery of new reserves, such as the Riksah field in January 2015 and the Mauddud in Bahra field in February 2015. These discoveries, and others, allow KOC to replace produced reserves. Lastly, over the course of 2015, we have successfully achieved a reduction in gas flaring to less than 1% of total gas produced in April 2015. This is considered a historical milestone, as it is the lowest in KOC history.

What are the major ongoing projects for KOC currently?

KOC is implementing a comprehensive capital investment program for the next five years that will allow us to increase our production capacity in line with our 2020 plan. There are several key projects that are key to realizing this aim, one being the implementation of an intensive drilling program—an estimated 400-500 wells will be drilled per year—for the next five years, including the application of the latest drilling technologies to maximize recovery from our reservoirs. Our drilling rig fleet at KOC has been increased in order to cope with this increase and efficiencies of our drilling operations are being optimized to achieve even more of an increase in the future. We have also embarked on two major field development programs focused on water injection plans in West Kuwait in order to maintain the current 500 million bpd production capacity of the area and increase it beyond current levels to 550 million bpd. In addition, there are three major development programs ongoing in the South and East Kuwait area, including a major water injection facility and a new gathering center to assist in S&EK of that area, maintaining its 1,700 million bpd production capacity target. In the North Kuwait area, we have started three major development programs, including three new gathering centers and another water injection facility to increase the conventional oil production capacity to 1 million bpd. We have begun the development of Phase I of the heavy oil program to reach a production level of 60 million bpd in the Lower Fars reservoir, a program that includes a heavy oil production facility, transit pipeline, as well as the associated export facilities. We are moving even closer toward our goal of bringing oil production to more than 350 million bpd and non-associated gas to 1 billion cubic feet per day by 2022 with the development of the second and third phases of the North Kuwait Jurassic reserves, a major step forward in our long-term strategy. In the interim, KOC is developing three Jurassic production facilities to expedite the development of the Jurassic reserves over 2017. On the exploration side of our strategy, we have implemented an intensive exploration program, aimed at replacing produced hydrocarbons and growing our reserves base. This program includes several 2D and 3D seismic surveys that cover the entire area of Kuwait, both on-shore and offshore, and is combined with an intensive drilling program to support it. Considering our storage capacity and export facilities, we are expanding in these areas as well to accommodate for the increasing volumes of oil we expect for export to international markets.

What role does international cooperation play in KOC's strategy?

International cooperation is very important for KOC to achieve our strategic goals. As we move to develop heavy oil and non-associated gas production, and as we enter offshore exploration and development, and moving toward tertiary production techniques in our conventional crude oil reservoirs, the participation of IOCs through Enhanced Technical Service Agreements (ETSA) will add significant value that will support KOC in the long term. We already have an ETSA with an IOC to support the development of non-associated gas production in the Jurassic reservoirs located in North Kuwait, and we look forward to starting additional ETSAs with other international companies to support other projects within KOC in the near future.

What are the most prominent challenges facing Kuwait's oil sector moving forward?

Amongst our challenges, we focus on delivery of our capital projects on time, finding skilled manpower to develop new projects, and the application of technologies that are new to us in the development of challenging reserves such as heavy oil and Jurassic gas. Support from external approval bodies to KOC is of critical importance.

What are the changing employment demands of the oil and gas business, and where do you see the greatest need for further human capital development in Kuwait's oil industry?

Future challenges appear in the rising demand for the application of new technologies, additional drilling activities, and increasing well surveillance activities and operations. This demands more employment in the technical fields. The greatest need lies in the demand of experienced employees, such as the ones who have experience in enhanced oil recovery processes. Our need for experienced manpower is directly proportional to the growing capital investments and complexity of our operations, which is becoming more and more demanding in the coming few years.

How do you see supply and demand evolving in the oil industry globally in the near future, and what role will Kuwait's oil play in the global energy mix?

We expect that global oil consumption will continue increasing through the coming years, and reach around 110 million bpd by 2040 from current consumption of approximately 92 million bpd. Main consumption growth will take place in India, China, and the Middle East. Middle East OPEC countries will play a significant role in providing the required increment in production capacity to supply this oil demand increase. Our advantage of having one of the lowest oil production and development costs in the world, together with the continued implementation of our strategic plan, will keep placing Kuwait as one of the most important oil producers in the region and worldwide. We will continue building our production capacity as per our 2020 strategy to ensure that we continue maintaining our position as a reliable crude oil supplier to the international market in the short and long term.

What are your expectations for KOC in 2016?

Next year, KOC expects to increase its production capacity of crude oil to more than 3 billion bpd, and 200 million cubic feet per day of free gas. The WARA Pressure Maintenance Program, a secondary recovery project in South & East Kuwait, and the Booster Station–171 in West Kuwait will be fully commissioned. The Marine fleet and facilities modernization will be completed as well as a pipelines project to feed fuel to the Ministry of Electricity and Water power plants will commissioned. In addition, we are looking forward to inaugurate the new Ahmadi Hospital to serve oil sector employees and their families and the new Oil Sector Display Center in the Ahmadi Township.

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