Stay Refined

Q8 is the marketing and dispensing outlet for 30% of total production. What responsibilities does that bring to Q8 for the wider KPC group?

KPI is the international downstream arm of KPC, and we operate outside Kuwait in the refining and marketing business. Europe has been our key market, and it is our plan to strengthen our position there by improving the efficiency of our operations and increase our presence in Asia. We all know that demand for oil products and energy is moving east. We sold our refinery in the Netherlands, but maintain our JV refinery in Italy and are growing our retail business in Northwest Europe. Our 2015-2016 growth in Europe was 15%, which is a very high percentage if we consider the declining demand in Europe. In 2015, European demand for petroleum products declined 11%, and 16% in 2016. Yet we have been able to increase our market share because we concentrate mainly on countries where we operate: Italy, the Netherlands, Belgium, and Spain. In these countries, we are also enhancing our international tools and service to meet the fueling needs of international road transport companies. Today, International Diesel Service (IDS) is one of Europe’s leading fuel card companies with a network of about 537 automated service stations in 23 countries across Europe. The IDS card provides outstanding control and security. An online authorization system gives protection against fraud and card use can be restricted to selected sites, countries or fuel purchase limits, putting our customers in control. We also completed our acquisition process of all Shell stations in Italy in 2016, which was started in 2015 for four product storage locations and about 830 stations, most in northern Italy. With this acquisition we became the second-largest player in Italy after state-owned Eni. In Asia, we are progressing well with the construction of a USD9 billion complex, integrated refinery, and petrochemicals grassroots project (Nghi Son Refinery & Petrochemicals, NSRP) in Vietnam. We are nearing the completion of the EPC contract, and we are expanding in other regions of Asia so we can achieve KPC’s objective of reaching an international refining capacity of 800,000 barrels per day.

Kuwait is all set to be the region’s next downstream hub with almost USD30 billion worth of megaprojects. What are your thoughts on these developments, and how do you position Q8 within this trend?

The refining industry has changed; simple small refineries can no longer compete with the large-scale petrochemical complexes. We have seen a slowdown in downstream investment, just as upstream investment has been reduced. Oil prices are low and the refining margin is not healthy enough to support any investment in downstream activities. Building a new refinery has become very expensive because you need to build a big, integrated, very complex refinery with petrochemicals production capabilities and expensive units to crack fuel oil. With these requirements it will cost no less than USD7-9 billion per project. However, in Kuwait and other GCC countries, we are proceeding with these projects because the oil business is cyclical. After three to five years in a downward cycle, there will be no projects around while demand has grown. We will face that period with very good projects on hand. The demand will catch up, especially in the Middle East and Asia.

Q8 is known for its emphasis on R&D with, among other locations, a major technology center in Rotterdam. What describes your latest research agenda?

Research is a very important part of our business, and that is why, when we sold the refinery in Rotterdam, we kept the research center. Our center, Q8Research, is essential because it secures product development, product specification, and quality control, especially in the fields of lubricants, jet fuel, and transportation fuel. Q8Research also specializes in developing customized formulations for high-performance applications for lubricating oils. Our latest agenda is how to enhance Q8Research’s training and development capabilities to other oil industry professionals from Kuwait and globally.