(MENAFN- Arab Times) KOC's 2030 strategy has set a production capacity target of close to 4 million bpd of oil and 1 billion BSCFD of gas. Bader Al Attar, Manager Corporate Planning, Kuwait Oil Company, was speaking at a seminar titled 'Kuwait Projects 2013' at Regency Hotel Monday. The 3-day event is organized by MEED. Attar stated that from the current capacity of 3.15 million bpd the capacity will be raised to 3.50 million by 2020. The Jurassic Reservoirs located in the North will be exploited for gas needs to achieve a targeted production of 1 billion BSCFD by 2030. Attar emphasized on the need for technological upgrade to increase production capacity. The recently established multilateral drilling method is producing 5,300 bpd of oil currently.
Some of the challenges Attar foresees in achieving these goals pertain to hiring of skilled talents from the Kuwaiti workforce. Participation of skilled workers from foreign countries is one way to overcome this challenge, he noted. The estimated total CAPEX from 2014/15 to 2018/19 is over KD 13 billion. The seminar was opened by Edmund O'Sullivan, Chairman of MEED Events, who said Kuwait's economy is among the best performing in the world, showing an inflation-adjusted figure of 10 % growth in the last 10 years.
Background
Giving a broad background to mega projects in Kuwait, O'Sullivan said the growth rate in Kuwait in the next five years is going to be low, due to slackening oil price and the feeling that oil demand will flatten. Non-oil sector is the key to growth in the future. O'Sullivan liked to look at mega projects as a sector. "It is the single biggest non-oil sector supporting growth in the near future." Kuwait will require 50,000 new workers every year for the next 10 years for the mega projects. Competitive tenders between construction companies squeeze prices will be a challenge to look out for. Ed James, Head, MEED Insight, for his part said Kuwait has been underperforming historically in awarding projects compared to its neighbors.
Factors that drive projects are oil prices, which when rise, additional revenues are channeled into development. Economic growth that creates demand for utilities, aging infrastructure, growing population, and diversification are other factors. Ed James spotlighted political problems such as the idea to bring in IOCs into Kuwait that was scuttled by the Parliament as an example of challenges to mega projects.
The lack of gas in Kuwait, unattractive environment for FDIs, complex decision making structures, and the inability of non-GCC citizens to hold property are also serious challenges.
Historically, the period between 2005 and 2012 saw the biggest boom in projects in the region, with $800 billion worth projects taking place. The peak of it came in 2009/10, as oil and gas projects continued full swing while the rest of the world was hit by crisis. However, the projects have sagged since then, the lowest point coming in 2012. Kuwait is the fourth largest project market in the GCC. There is a huge backlog of projects waiting to take off to set off an upward trend, Ed James rationalized. Some of the largest project clients in Kuwait are MPW, Kuwait University and KNPC. Oil, power and infrastructure are areas where the most money is going to spent.
By next year, the money invested in projects in Kuwait will rise from $8 billion to $20 billion. Mina Abdallah Refinery will be the single largest project in the region. Kuwait's heavy oil and hospital projects will also feature prominently on the list. Ed James noted that most of these projects are in the bidding stage or pre-tendering stage, which means they have moved forward from the planning stage, and will be awarded in the next 12 months. Sheikh Jaber Al Ahmad Al Sabah bridge, linking Subbiya across the Kuwait Bay, will push population growth Northwards, and is an important project. Engineer Abdul Mohsen Al Enazi, Assistant Undersecretary, Planning and Development Ministry of PublicWorks, spoke at the seminar about the ministry's strategies in the mega projects.
Causeway
He said there are totally 150 projects in the pipeline with over 400 contract agreements worth KD 8 billion. Road projects alone are worth KD 265 million. Jaber Al Ahmed Causeway project is worth KD 750 million. MPW's principle is non-centralization of execution and centralization of planning. Undersecretary of Labor Affairs in the Ministry of Social Affairs and Labor, Jamal Al Dossery, clarified Kuwait's foreign labor policies at the seminar. There are 350,000 workers in the construction sector and half a million more in other sectors in Kuwait. He outlined the measures the ministry has taken to safeguard the rights of the workers as stipulated in the constitution. The undersecretary touched upon the recent amendments in labor law undertaken to give workers more rights. The revision was done after due consultations with ILO.
The main discussions in the Parliament regarding the revision revolved around labor rights. The lowest wage has been fixed at KD 60, and salaries have to be transferred to the bank accounts of workers. Al Dossary conceded complexities in contracts and other formalities create delays in the hiring of manpower. The ministry has been working to resolve this issue, and automation systems are providing solutions. The labor office in Kuwait receives up to 50,000 complaints every year, and about 8000 of them get resolved before going to the court. He stressed that Kuwait upholds international conventions and has signed more than 8 agreements with the ILO.
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