Ahmad Al Jemez, Chairman, Kuwait Aromatics Company: Interview

Interview: Ahmad Al Jemez

What are Kuwait’s main advantages for increasing activity and growth in the petrochemicals sector?

AHMAD AL JEMEZ: Kuwait, and most of the GCC oil producing countries with high refinery processing capacities, is well positioned to play a major role in the aromatics business, as we have good access to the required feedstock, naphtha or condensate. The GCC countries all have different and individual growth requirements. Naphtha production in Kuwait is over 7m tonnes per year and only one third of that is consumed locally for use in the current aromatics plant. With Kuwait’s Clean Fuel Project (CFP) and the Al Zour refinery, more naphtha will be made available, and this can be fully utilised in aromatics and olefin production facilities. On top of that the already well established industrial infrastructure at the Al Zour facilities will facilitate new industrial establishments in its immediate vicinity. Kuwait also has plenty of room to create employment opportunities and increase GDP growth from the related industrial and service sectors. Together all these elements will give Kuwait an advantage in pursuing growth in its petrochemicals industry.

Can KARO’s example set a precedent for further private sector involvement in the aromatics industry?

AL JEMEZ: KARO is a joint venture between the Kuwaiti government and the private sector. The ownership structure brings value from experience in the refining and petrochemical segments, with a local investor that is eager to meet the industry’s potential of Kuwait. This mix of experience and potential sets the pace for future growth in the private sector, both locally and globally, as opportunities emerge and develop around us. Originally, when the private sector entered into petrochemical projects, its share was only at 10% of the total investment. This later increased to 15%, and is up to 20% on new mega-projects. This change in ownership reflects both a greater growth of experience and higher involvement than we planned for. We see the private sector taking more interest in opportunities in future projects; at the same time the stage is being set to establish wholly owned downstream companies in Kuwait, which will then be able to participate in regional opportunities.

Do you feel there is adequate local investment in hydrocarbons resources?

AL JEMEZ: Local investment in hydrocarbons can be divided into three categories; upstream, exploration and production. I believe investment in this sector is well established and is taking the lion’s share of spending in Kuwait. This core sector provides a great deal of income for the country, so we must maintain its capabilities and growth potential and meet its challenges as they arise. New opportunities are emerging in new fields and offshore, and the challenges of heavy oil and enhanced oil recovery require more and more investment into the barrels being produced.

The refining sector is now growing with the new additions of the CFP and the Al Zour refinery, with these adding another 615,000 bpd of crude while also retiring a small older refinery. The total refining capacity of Kuwait will increase from 936,000 bpd to 1.42m bpd. This growth will produce a slate of products that can be employed in petrochemical projects. Kuwait is spending $15bn on the CFP and another $16bn for the Al Zour refinery. The petrochemical industry in Kuwait is well established on the commodity side. More opportunities are available today, and in the future, which will come from the refineries’ products and from anticipated natural gas production. There is great potential to build facilities similar to the current olefin and aromatics unit but with larger capacities. There are exceptional opportunities available in these areas due to the wide availability of propane, butane and petrochemical naphtha; we simply need to make best use of our resources. Kuwait is currently looking at a new petrochemical complex, which will host a major aromatics plant and olefins facilities with olefin derivatives. A detailed feasibility study into this will be completed at the end of the year.