Posted on

Kuwait’s petrochemicals segment broadens its product base

In September 2016 Mohammad Al Ajmi, director-general of the Public Authority for Industry, announced plans to boost Kuwait’s industrial output by 25% in the coming years. Although the state controls nearly 101bn barrels of proven crude deposits, the drop in oil prices has compelled the government to push ahead with a host of economic reforms aimed at diversifying the economy through industrial expansion. The success or failure of this expansion and the expected double-digit growth in industrial output will largely depend on the country’s petrochemicals and plastics segments.

Economic Contribution

Kuwait first ventured into commodity petrochemicals in the 1990s, producing polypropylene, polyethylene and monoethylene glycol for the first time in 1997. Now, two decades later, petrochemicals provide the highest added value to the country’s industrial output. The Kuwait Direct Investment Promotion Authority has forecast significant growth in petrochemicals output over the next several years, rising from 7.57m tonnes per annum (tpa) in 2014 to 10.54m tpa in 2019. The added production should go some way towards boosting export revenues, with organic chemical exports already valuing KD77.9m ($257.7m), or 2.2% of total exports, between April and June 2016, followed by plastics and plastic products at KD60m ($198.5m), or around 1.7%.

Sector Structure

State-owned Kuwait Petroleum Company (KPC) is the holding firm for Kuwait’s energy enterprises, currently operating eight subsidiaries including Petrochemical Industries Company (PIC), which manufactures fertilisers, olefins and aromatics, and Kuwait Integrated Petrochemical Industries Company, approved as a new KPC subsidiary in October 2016. With estimated capital of KD1.8bn ($5.9bn), of which roughly KD450m ($1.5bn) is paid-up, the new subsidiary will execute and operate major downstream refining and petrochemicals projects, including construction and integration of the 615,000-barrel-per-day (bpd) greenfield Al Zour refinery, along with an associated petrochemicals complex and a new liquefied natural gas import terminal. When completed in the second quarter of 2022, the production capacity of Al Zour will make it one of the largest refineries in the region. Construction of the project, together with the planned upgrades at the Mina Abdullah and Mina Al Ahmadi refineries, is expected to increase Kuwait’s refining capacity to over 1.5m bpd, which will in turn strengthen the country’s petrochemicals segment. These projects are also expected to increase availability of naphtha, which can be used as an alternative feedstock for petrochemicals, alleviating concerns around the shortage of gas feedstock.

Increased Competition

With large shale-based petrochemicals capacity scheduled to come online in the US between 2017 and 2019, the petrochemicals industry views the shift to liquid feedstock as an urgent step necessary to differentiate GCC product lineups from those in the US. The Olefins III project, carried out by PIC, is one of only three major projects using liquid feedstock to take shape in the region over 2015-25.

PIC is also pursuing geographic expansions. In 2016 it purchased a 25% equity stake in SK-Advanced, a propane dehydrogenation venture owned by South Korea’s SK Gas and Saudi Arabia’s Advanced Petrochemical. The project was reported to have reached 105% of its designed capacity of 600,000 tpa by November 2016.

Underscoring growth across petroleum product categories, Kuwait-based Integral Plastic Industries announced plans in late 2016 to establish a $272.2m plant in Abu Dhabi’s Khalifa Industrial Zone. Production is expected to commence in the first quarter of 2018, with a goal of producing 15,000 tonnes of plastic bottles, caps and packing strip rolls each year.

Kuwait and the broader GCC are under growing pressure to diversify. By developing core petrochemicals capacity through geographic expansion and improving domestic efficiencies, Kuwaiti petrochemicals firms can better weather lower prices and increased competition.

Source:https://oxfordbusinessgroup.com/analysis/feedstock-value-petrochemicals-segment-broadens-its-product-base-response-low-oil-prices

Posted on

Kuwait economy diversifies with growth in non-oil sectors

kuwait

Although Kuwait’s economy is dominated by hydrocarbons, it is non-oil activity, alongside the rebound in crude prices experienced since January 2016, that is driving growth forecasts. National Bank of Kuwait estimated overall real GDP growth of 3.6% in 2016, and forecast growth of 1.7% in 2017 and 2.7% in 2018, while in the non-oil sector it anticipated growth of 3.5-4% in 2017 and 2018, driven by strong investment. The IMF bases its calculations on the calendar year, rather than the fiscal year, and estimated non-oil GDP grew by 5%, 3.5% and 3.2% in 2014, 2015 and 2016, respectively, and predicts non-oil growth of 3.5% in both 2017 and 2018, expanding to 4% in 2021.

Sector Data

The most recent public data for Kuwait’s non-oil economy is for 2015, which showed the dominant sectors were: community, social and personal services; real estate; financial intermediation; and transport and communications, accounting for 35%, 14%, 14% and 10% of non-oil GDP, respectively. All four sectors grew by 1-4% in 2015. Manufacturing, including refining, was worth 9% of non-oil GDP and had shrunk by 10%. Expanding sectors included hotels and restaurants, and utilities, up 12% each, wholesale and retail, up 6% and construction up 5%.

After several years of limited progress on government mega-projects from 2010 to 2013, there was a noticeable shift in the pace of development in 2014 and 2015. In 2014 more than KD7.5bn ($24.8bn) in projects were awarded, but the real bumper year came in 2015 when KD12bn ($39.7bn) worth of development contracts were signed across a range of sectors. In 2016 the pace dipped a little with KD5.6bn ($18.5bn) worth of awards. In February 2015 Kuwait’s National Assembly signed off on KD34bn ($112.5bn) in development projects for the five-year period between FY 2015/16 and FY 2019/20. Of the 521 projects, 421 had originally been part of the previous development plan, with 92 new schemes also approved. By early 2017 a significant number of new contracts had been awarded, but many others had been deferred, leaving the potential for a significant uptick in project activity.

Downstream

Against a backdrop of lower global oil prices, a significant proportion of the government contracts awarded in Kuwait in the three years from 2014 to 2016 were in the energy sector. Developments in the industry are driven by the desire to expand downstream refining capacity. Kuwait National Petroleum Company (KNPC), the downstream arm of state-owned Kuwait Petroleum Corporation (KPC), has billions of dinars worth of projects under construction. In 2015 KNPC awarded KD3.48bn ($11.5bn) in contracts for the country’s fourth refinery, Al Zour, which will have a capacity of 700,000-800,000 barrels per day (bpd), up from the 615,000 bpd originally planned, according to local press reports. One of the contracts, worth KD1.28bn ($4.2bn), was to develop the refinery’s industrial unit and was won by a consortium made up of Spain’s Tecnicas Reunidas, Hanwah Engineering and Construction Corporation of South Korea and China’s Sinopec. It was expected to take 45 months to complete.

In addition, two contracts worth KD1.75bn ($5.8bn) for infrastructure and support were awarded to Daewoo Engineering and Construction and Hyundai Industries Co, while a third package worth KD454m ($1.5bn) was given to a consortium including Saipem SpA and Hyundai Engineering. In March 2016 Hyundai also won the KD1.1bn ($3.6bn) contract to build the new liquefied natural gas (LNG) import and regasification terminal in the Al Zour area. Hyundai Engineering and Construction will build eight LNG storage tanks, while Hyundai Engineering will build the regasification terminal. Korea Gas Corporation will be responsible for commissioning and operational training for the clients. The project is expected to take 58 months and be complete by 2020. KNPC is also spending billions on its existing refineries, expanding Mina Abdullah and Mina Al Ahmadi and subsequently decommissioning Shuaiba. This mega-project is subdivided into a number of packages, with packages 1 and 2 for the Mina Abdullah refinery, as well as the deal for Mina Al Ahmadi refinery, awarded in 2014. In the final quarter of 2016 KD147m ($486.3m) in pipeline contracts were awarded for the new refinery at Al Zour. Kuwaiti firm Combined Group won the KD84m ($277.9m) contract for the oil pipeline, and the KD53m ($175.3m) contract for the gas pipeline also went to a local firm, Arabi Enertech. In early 2017 construction firms were waiting for the KD2.12bn ($7bn) contract to build an integrated olefins III plant for Petrochemical Industries Company, a KPC subsidiary. The plant would have the capacity to produce a 1m tonnes of polyethylene and 500,000 tonnes of polypropylene per year.

Culture

Kuwait is also making what has been described as the world’s biggest new cultural investment: a district devoted to the arts, museums and heritage. In October 2016 the Sheikh Jaber Al Ahmad Cultural Centre opened in Kuwait City. The $775m landmark facility includes a 2000-seat theatre, a music centre, libraries and a conference centre.

Adjacent to the centre, a new museum district is also being built over 13 ha. The Sheikh Abdullah Al Salem Cultural Centre will have museums devoted to science, natural history, space and Islamic history and is due to open in 2018. In June 2016 the Amiri Diwan announced that Bayan National Trading Company had been awarded a KD49m ($162.1m) contract to design and build Kuwait’s Motor Town, which is to include seven racing circuits on par with international standards, enabling Kuwait to host Formula One and MotoGP races.

Health Care

The Amiri Diwan has also led the development of new flagship medical facilities. The new Al Jahra Hospital, with 1171 beds and 20 operating theatres, is being built at a cost of KD390m ($1.3bn). Also, 40 km away, the 1168-bed Jaber Al Ahmad Al Jaber Al Sabah Hospital is being built concurrently. The KD304m ($1bn) project is planned for the Ministry of Health. In 2017 Italian firm Pizzarotti began work on t a new 600-bed maternity hospital at a cost of KD250m ($827.1m).

Airport Expansion

The need to expand Kuwait’s international airport is pressing, and the Amiri Diwan has taken control of the contract to build a passenger support terminal (PST). The contract was awarded in November 2016 so that 4.5m passengers annually can use the airport while the PST is being built. The KD52m ($172m) contract stipulates that the work must be completed in 450 days. In 2015 Turkish company Limak Holding was awarded the KD1.3bn ($4.3bn) contract to build the main terminal building at the Kuwait International Airport, tripling capacity by 2022.

Roadworks

A number of major road and bridge-building projects are also taking place in Kuwait, the most significant of which is the Sheikh Jaber Al Ahmad Al Sabah Causeway (SJSC), which spans Kuwait Bay from Kuwait City to the Subiyah area, where the Silk City development is to be built. In 2014 a KD147m ($486.3m) contract was awarded for the Doha link to the SJSC, which will cross Sulaibikhat Bay between Shuwaikh Port in Kuwait City and the Doha peninsula. New roads are also being built connecting the Saudi border to the sixth ring road (see Transport chapter).

Housing

The housing sector in Kuwait has also seen renewed impetus. In 2016 the Public Authority for Housing Welfare signed a KD288m ($952.7m) contract for an infrastructure works package for South Mutlaa City, which will be completed as a joint venture between Italy’s Salini and Turkey’s Kolin. When completed, the site will include 30,000 residential units. The Kuwait Projects Company also awarded its KD723m ($2.4bn) Hessah Al Mubarak mixed-use project to the Ahmadiah Contracting Trading Company in 2016. Then, in 2017 a contract was signed with korea Land and Housing Corporation to build South Saad Al Abdullah New City, a smart city, with construction set to get under way in 2019.

Power & Water

A significant milestone was reached in November 2016 when phase one of Kuwait’s KD2.4bn ($7.9bn) Al Zour North Independent Water and Power Plant was completed on time and on budget. This was the first construction project delivered by public-private partnership in the country and looks set to be replicated in the near future with similar schemes to be tendered, such as Al Zour North Two and Al Khiran (see analysis).

Source:https://oxfordbusinessgroup.com/analysis/branching-out-non-oil-sectors-see-flurry-new-activity

Posted on

Iraq, Saudi Arabia sign 18 energy memorandums in Basra

Iraq, Saudi Arabia

Baghdad (IraqiNews.com) Iraq and Saudi Arabia have signed 18 memorandums of understanding in the energy field during the kingdom’s participation in an energy exhibition in Iraq.

The signing of the 18 memorandums of understanding came after Saudi Energy Minister Khaled al-Faleh inaugurated the seventh edition of the Basra oil and gas exhibition, according to the Saudi Press Agency.

It quoted the minister saying that 22 Saudi companies took part in the exhibition which comes to reinforce the “strategic partnership” between the two countries.

He said enhanced relations and energy cooperation between both countries will help bring stability to the international oil market, with both being prominent OPEC members.

Relations between Sunni-ruled Saudi Arabia and the Shia-dominated Iraqi government have been tensional over the past few years due to Saudi Arabia’s opposition to the involvement of Iraqi Shia paramilitary forces in the fight against Islamic State. Saudi Arabia has always been irritated by the influence of Shia Iran, its arch regional enemy, over Iraqi politics.

But the past months have seen an obvious rapprochement between both countries, with top-level officials exchanging visits and expressing eagerness to boost political, security and economic cooperation.

In October, more than 60 Saudi companies attended the Baghdad International Exhibition.

In July, both countries established a joint coordination council to boost ties on all levels.

Source:https://www.iraqinews.com/business-iraqi-dinar/iraq-saudi-arabia-sign-18-energy-agreements/

Posted on

Iran-Georgia trade balance increases by 50 percent in 2 years

Iran-Georgia trade balance

Baku, Oct 10, IRNA – Iranian Chairman of Iran-Georgia Joint Economic Commission Ali Rabiei said on Monday that the two countries’ exchanges over the past two years have reached $131 million, showing an increase of 50 percent.

After a meeting with Georgian Prime Minister and Minister of Finance Giorgi Kvirikashvili in Tbilisi, he told IRNA that during the meeting it was agreed to raise volume of trade transactions by twofold.

Referring to certain obstacles in the way of mutual cooperation, Rabiei also said that transit of the Iranian lorries through Georgia which has increased from 4,000 to 12,000 faced problems due to method of obtaining permissions, but it was agreed that Iranian lorries drive through the country without the need for obtaining any permission.

He further noted that Georgian premier declared during the meeting that he is pursuing monetary and banking exchanges enthusiastically.

Rabiei also proposed establishment of Iranian bank branches in Georgia but final decision thereof will be taken later, Rabiei said.

Both sides expressed their political support for each other and voiced readiness for cooperation in various fields, including economy, energy, transportation and other joint projects, Rabiei said.

Sixth Meeting of Iran-Georgia Joint Commission kicked off in Tbilisi on Monday and will continue until Tuesday.

Iran-Georgia exchanges over the past two years have reached $131 million of which $83 million are exports from Iran to Georgia.

News taken from :http://www.irna.ir/en/News/82690723