SHAIKH NAWAF SAUD AL-SABAH

Kuwait 2020 | ENERGY | VIP INTERVIEW

TBY talks to Shaikh Nawaf Al-Sabah, President and Chief Executive Officer of KPC Holdings, on the company's growth strategy, joint ventures, and digital payment systems.

What are KPI and KUFPEC's growth strategy in new and emerging markets?

KPI's direction in new and emerging markets is to expand and grow its refining and marketing operations, the aim of which is to create value for our shareholder, KPC. We will explore the full potential of the value chain from upstream to midstream and downstream. As you know, we are partners at a refinery in Vietnam that was commissioned in November last year and is producing 200,000 bpd and takes 100% of that crude from Kuwait, and produces refined products that are sold to the Vietnamese market. We have also partnered with Oman to build another refinery in Duqm with a capacity of 230,000 bpd and that will be another home for Kuwaiti crude. Each of those refineries will have a petrochemical project within it. Our strategy is to have an integrated refinery with petchem in all of our new investments. As for KUFPEC, our current portfolio consists of 44 assets distributed across 13 countries, and includes five operated exploration assets in Pakistan, Indonesia and Australia. In 2019, we produced more than 108 mboepd supported by YE 2019 2P reserves of 450 mmboe, and our updated strategy is to take KUFPEC to a mid-size exploration and production company. The exploration success we recently had in Malaysia may lead to the growth of a new production and reserves hub. The exploration well Lang Lebah-1RDR2 in SK410B encountered 252 m of net gas pay. Preliminary estimates show three TCF of Resources, which is equivalent to 536 mmboe (gross) and 115 mmboe (net). KUFPEC has shown resilience despite oil market volatility, and looking forward, we will continue to optimize our portfolio to meet our commitments to our shareholder and unlock value for Kuwait.

Both KPI and KUFPEC have had a successful run of establishing and managing joint venture projects in several continents. What makes them the optimal partner for a JV?

Both KPI and KUFPEC bring the might of our shareholder, KPC, to the negotiating table, which provides secure, reliable, stable access to Kuwaiti crude. Both companies have a long track record of successful partnerships and JVs spanning decades. This is because our values are built on fostering and sustaining relationships that enhance our growth and operational excellence. We are also dedicated to a drive towards continuous improvement, in addition to our unwavering commitment to the highest standards of ethics. For KUFPEC, we look for IOC or NOC partners that will help us continue to optimize our existing portfolio through operational excellence and focus on attractive acquisitions, while for KPI, we focus on partners in high growth captive markets that complement our portfolio. Irrespective of commercial focus, both companies provide their JVs with a trusted, stable, reliable business partner.

Digitalization is a key element of the innovative business model that KPI and KUFPEC pursue. What key initiatives are they currently undertaking to digitalize its new investments?

KPI has formulated a digital roadmap, designed to synchronize its business to the digital revolution. Projects undertaken to achieve the strategy include investments in smart systems, payment solutions, and digital marketing. Meanwhile, KUFPEC's diversified portfolio (includes Offshore, LNG, and Unconventional operations) enjoys strengths in technology and know-how. For example, in offshore drilling, we work with our sister company, KOC (Kuwait Oil Company), to help them apply our knowledge in Kuwait.

Outside of its large-scale operational investments, KPI is also working to digitalize its consumer-facing business through its digital payments systems. What goals has KPI set for adoption of digital payments through its different direct services?

Digital payments are a fundamental part of the KPI Digital roadmap. It will certainly improve our customer proposition. The ultimate goal is to attract new customers to our stations and retain our current customer base with loyal schemes. For example, one of our customer-centric, mobile payment solutions in Belgium, the Q8Smiles app, allows motorists to pay for their fuel and shopping from the comfort of their car. It also offers them rewards from third-party vendors through the collection of 'smiles' by visiting our stations. Similar projects are in the pipeline in Italy.

KPI has recently been expanding its retail operations. Can you outline KPI's growth strategy for retail?

KPI's strategy focuses on growing its retail outlets in new markets while enhancing its sustainable position in Europe mature markets where our brand is strong and well recognized. Last year, we closed major acquisitions of retail stations in Spain and Belgium. We believe the growth will be in the coming years; on the other hand, the main theme for our fuel retailing operations in mature markets such as Europe is innovation and sustainability. The Q8 brand is the most noticeable and internationally known brand within the KPC family of brands. Tell us more about what it represents as a Company, and what it means to your customers and partners. KPI is the international downstream arm of our shareholder, KPC, which is one of the biggest National Oil Companies in the world. Our distinctive Q8 brand reflects our shareholders' maritime heritage; the sails symbolizing the Arab dhow while the colours yellow, red, and blue symbolise the desert, sun, and sea.To our customers, this translates to quality and a history of service. To our partners, it means stability and reliability. Our brand is a reflection of Kuwaiti business operations abroad, and it is our role to enhance our national reputation in the international market, and to continue to show our customers and partners that we are easy to do business with, especially with support from KPC.

How do KPI and KUFPEC bring their international experience to the family of K-Companies?

We provide international development opportunities for young Kuwaiti professionals to be trained with oil majors, so they can hone their skills and bring back that expertise to us. KUFPEC has been working on several opportunities that can provide operational, financial, legal or commercial synergistic value to the KPC Group of companies and continues to find new innovative ways to leverage what we've learned from our portfolio for KPC. In 2019, KUFPEC provided 31 opportunities for training and capability building to oil sector employees by providing secondment to KUFPEC Area Offices and JV Partners. As for KPI, we have Kuwaitis leading several of our operating units abroad in Europe and our JVs in Asia, the total numbering surpassing 60 employees.