KPC: In search of a petrochemical partner in Kuwait

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KUWAIT Petroleum Corporation (KPC) is seriously searching for a petrochemical partner, but no partner is willing to come and invest jointly with it. This is because it is not offering them any incentives to become a partner, unlike our neighboring countries. Although Kuwait was the first country in the region to have foreign partner in its joint venture with EQUATE, which was with Dow Chemical Company back in 1995 with ongoing net profit of $1 billion per annually, our history is stained with our bad experience with foreign partners such as the bitter experience we had with Dow Chemical Company, which ended up in KPC paying $2.2 billion in penalties for not fulfilling the deal in 2013.

It is a hard task to climb but it is necessary in order to have a fully integrated refining and petrochemical unit that would lead towards maximizing the net profit, and gaining new experience in the petrochemical field for our young Kuwaitis. However, such advantages disappear when there is a lack of clear objectives in our relationship with foreign partners. If we do it, it will be on an adhoc basis, and depending on the mood of the day. Here is where the KPC management must play its role in defining and coming up with concrete proposals, particularly about the incentives to offer potential partners, provided all the necessary government backing and approval from the parliament is given.

Furthermore, we must be open and transparent, as foreign companies experienced bitter internal criticism and were facing daily insults, which left them embarrassed unlike the treatment they receive in other countries. Lack of participation is both internal and external, without clearly defining any benefits to the investors and future partners such as greater financial benefits and utilization of any allocated land. Besides, we do not seem to have clear rules and regulations to govern such partnership agreements.

Strangely however, why doesn’t KPC try to offer the EQUATE joint venture agreement with Dow Chemical as an example and work on improving it? We need to improve and build our petrochemical business as an added unit to refining, and reap the maximum benefits from the new technology with an added maximization of financial benefits. With the diminishing of future demand for certain petroleum products, oil becomes the new feature feedstock and raw material for the petrochemical industry in the future. Is KPC not ready for accepting foreign investments and developing to advance our petrochemical industry?

It is KPC’s role to be active and pursue all avenues to advance its new chemical venture. How is it that Kuwait was the leading venture in the world in creating its first petrochemical unit within the national and OPEC countries, but is now lagging behind everybody, especially with our oil and financial resources? The thought is very alarming. We keep missing opportunities one after the other. It is KPC’s responsibility to come up with ideas. It should not miss such a venture.