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Issue No.25 , July-October 2003

KNPC Introduces New Projects

to Improve Quality, Reduce Pollution

Dow Chemicals KPC’s Partner in

Second Olefins Project

KUFPEC: Continued Success

in the Far East

KPC’s Quest to

Elevate HSE Performance

Investing in Future

Generations:

KPC Launches Training

Programme for Youngsters

Kuwait Project: Combining

National Interests with

Economic Concern

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2003 Kuwait Petroleum Corporation is a state owned and commercially oriented

corporation. It is one of the leading oil and gas producing companies in theworld and its activities are focused on petroleum exploration, refining, andmarketing petrochemicals and transportation.

Our mission is to manage and develop these integrated activities worldwidein the most effective manner so as to ensure the optimum exploitation of Ku-wait’s hydrocarbon resources to achieve the maximum financial return to ourshareholders, the Government of the State of Kuwait and develop the capabili-ties of the national manpower.

Editor- in- Chief

Talal Al KhalidAl SabahExecutive AssistantManaging DirectorCorporate Projects,Governmentand ParliamentRelations & Media

I s s u e N o . 2 5 , J u l y - O ctober 2 0 0 3

In This Issue:

Bonded by aCommon Passion:KPC Seeks theexpertise of Dupontto Improve HSEPerformance

Investing in Future Generations:KPC’s Ambitious SummerProgramme

The Northern OilFields Project: Setto achieve GreatEconomic Benefitswhilst Strengtheningthe Natural Re-sources of Kuwait.

KNPC ImplementsFive KeyProjects to ImproveQuality and Re-duce Pollution

PIC Chooses the USCompany DowChemicals as KPC’sPartner in theSecond OlefinsProject

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Managing Editor

Fadel JermanMedia Manager

Editorial Team

MediaDepartment Staff

Copy -editing

Besma Al QassarTrident EWC(English WritingConsultants L.L.P.)

The KPC World Editorial Team expressesits thanks and appreciation to all who con-tributed editorial and information materialand photographs to produce this issue of KPCworld.

P.O.Box: 26565 Safat - 13126 Kuwait

Tel.: (965) 2400960 - Fax: (965) 2407872Website: www.kpc.com.kw

E-mail: media@kpc.com.kw

KUFPEC: ContinuedSuccess and AstuteInvestment in theFar East

A Pictorial Historyof the Discovery ofOil in Kuwait

Broad and Diversi-fied Activities inSpain for KuwaitPetroleum Interna-tional

KGOC CommencesOperations in theDivided Zone

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The project to develop the northern Kuwaiti oilfields has undoubtedly been the subject of a great deal of discussionover considerable period of time. Its feasibility and strategic implications have been argued over by concerned authori-ties in seminars and in private and public meetings. These meetings have led to a range of views being expressed: fromthose who are fully supportive of the project to those who have been decidedly critical about its implications.

A project of this size and status is naturally going to attract a great deal of attention both inside and outside Kuwait.It is regarded as a long-term strategic project. Therefore, its benefits, advantages and effects cannot be defined over ashort time period, nor can they be defined within a limited geographical area. Instead, this project will become one ofthe basic factors contributing to the continuation of the development process of our beloved country. It is also one ofthe major projects which the political leadership has planned. Therefore, both present and future generations maycontinue to profit from the wealth our Creator has bestowed upon our blessed country, Kuwait, allowing us to enjoy thewelfare, progress and growth that this gift has provided.

While the relevant Kuwaiti authorities have been planning this project for several years, its acceleration is perhapsnow inevitable, given the recent liberation of Iraq. This important development ended a period of considerable instabil-ity and threatened security which unsurprisingly, placed insurmountable obstacles in the way of progression.

Some may view this project with some trepidation, fearing that major foreign companies will come to dominateKuwait’s oil and wealth. We must make it clear that this apprehension - even if it is based on patriotic feeling - is not atall appropriate. Anyone who reviews the project’s studies will discover that those in charge took great pains to ensurethat the participation of major foreign companies would be purely technical, and would not go beyond the frameworkof technical support. Kuwait will benefit from their expertise and advanced technology particularly in terms of pros-pecting and extraction techniques. Nevertheless, Kuwait will have complete control over the resources of the projectand its ensuing profits.

In this issue of KPC World we refer to the huge step that the Kuwait Gulf Oil Company, a KPC subsidiary, hastaken. KGOC has assumed all the responsibilities of the Arabian Oil Company in the Divided Zone after the conces-sion agreement which has been in place for 40 years, was terminated. In addition, the company has also launched itsnew slogan which expresses many important ideas. We hope it will make a distinctive impression on the Divided Zone,which is so vital for our country.

Developing the Northern Oil Fields: A Strategic Project

Talal Al Khalid Al SabahExecutive Assistant Managing Director

Corporate Projects, GovernmentParliament Relations & Media

Editor-in-Chief

EDITORIAL

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WODHM« PAM*« W öË 5K UF« Õ«Ë—√ W¹UL(

The Organiza-tion of PetroleumExporting Coun-tries (OPEC), at the

conclusion of its last Ministerial Meeting in Doha, decided to main-tain the production quotas unchanged.

The final communiqué of the meeting said that the conferencehad decided to maintain the present agreed levels of production,and try to enforce them with precision. It emphasized its desire tomonitor market developments during the forthcoming period. Thepresent quota for OPEC production without Iraq totals 25.4 millionbarrels per day. The final communiqué, which an OPEC official readout at a press conference, added that the forthcoming meeting inVienna will deal with Iraq’s return to the oil market. Oil prices con-tinued to decline, without deteriorating strongly, following the OPECdecision to maintain production quotas without any change.

Oil prices at present are close to the upper limit of the pricerange targeted by OPEC, which is between $22 and $28 per barrel.This gives OPEC ministers the opportunity to wait before carryingout the first reductions in output since 2001.

For his part, Sheikh Ahmad Al-Fahad Al-Ahmad Al-Sabah, Minis-ter of Energy, affirmed that OPEC will continue to maintain produc-tion rates and will carefully follow up the oil market situation. Hementioned that there will be a consultative meeting of OPEC at theend of this month to get to know the market situation, and then the

necessary decisions will be taken based on the changes that havebeen monitored, and the normal meeting of the organization will beon 24 September.

The Minister welcomed the return of Iraq to international oilmarkets. “We are happy that Iraqi production is returning, happythat it is recovering, and that the Iraqi people will obtain their wealth.We believe that the presence of Iraq in the market may increaseexisting production, but we are confident that this will need time inorder to have an effect on prices. As an organization we have agreedto follow up the situation carefully.»

On the subject of a glut and increased opportunities in the mar-ket, Sheikh Ahmad stated, “there is a glut, and in spite of this glut,the organization‘s target prices are still as they were, they haven‘tdeclined from the normal average. This means that OPEC produc-tion is still below the right price ceiling. With this level of prices andslow economic growth, which does not represent anticipated aspi-rations, we are not supposed to reduce our output with the aim ofraising prices.

He mentioned that the equilibrium of prices between consumerand producer is an important matter that the organization is eagerto achieve. “Accordingly we did not decide at the last meeting tolower production or change quotas, but only to deal with additionalproduction which has begun to exceed a million barrels per day. Wemust deal with it in order to arrive at the official ceiling and thequotas that have been decided before next September’s meeting.»

Sheikh Ahmad Al-FahadWelcomes Return of Iraq to Oil Market

OPEC to Maintain ProductionLevels and Monitor Market

The International Marketing Sector inKPC has skilfully succeeded in strengthen-ing its business relationship with the IndianOil Company (IOC) once again.

The Marketing Sector succeeded in re-newing its contract to supply IOC with crudeoil on an annual basis. This is credited thegood relations and outstanding serviceswhich the marketing team in the Corpora-tion offers its clients. India is considered amajor market for KPC.

Through the years, the Corporation hasmanaged to secure long-standing relationswith IOC, and with several other Indian com-panies. India is the sixth largest energy-con-suming country in the world, and it dependson three main energy sources, crude oil,coal and nuclear energy as a source to

power. Several changes have occurred re-cently to the laws related to the sale of crudeoil in the Indian market. IOC used to be theonly company responsible for marketingcrude oil inside the refineries in the Indianmarket. But now, with the increase in de-mand for crude oil products in those mar-kets, and because of the difficulties the In-dian government is facing in trying to con-

International Marketing Renews Contract with IOC

trol the prices of oil products to confrontthe fluctuations of world prices, it haspassed new laws which allow the privatesector to import crude oil directly from worldmarkets and through external intermediar-ies. This has increased investment and ex-ploration activity in the local market by theprivate sector, and thus, reduced demandfor these products.

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Improving HSE standards and performance has become a KPC priority. Logi-cally, to become one of the best, you have associate yourself with the best as goesthe old adage. To become a regional leader in HSE, KPC knew the smartest andwisest thing to do was to seek the expertise of a world HSE leader. Thus a partner-ship of improvement was born between KPC and Dupont De Nemours interna-tional.

In a heavily attended press conference held recently, KPC and Dupont announcedan agreement to develop a corporate Health, Safety and Environment ManagementSystem and the required necessary standards and guidelines.

Bonded by a Common PassionKPC, Dupont: Partnership

of Improvement

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The tide of improvement is cham-pioned by Nader Sultan, Deputy Chair-man and Chief Executive Officer, whois determined to realize KPC’s visionto become a regional leader in Health,Safety and Environment ManagementSystem performance to ensure the pro-tection of the environment and thehealth and safety of its employees andcontractors.

The purpose of this project is to pro-vide KPC consultancy services for thedesign, and development of a corporateHSE Management System and neces-sary standards, guidelines to meet theKPC vision set out above. The new KPCCorporate Health, Safety and Environ-ment Management System will com-

bine the elements, standards and guide-lines already in place at the major af-filiates and upgrade them by transfer-ring and adding knowledge containedwithin the Dupont Corporate system.This will be based on the proven suc-cessful system developed by Dupontand applied at all of its facilities andlocations around the world. A Dupontteam consisting of senior consultantswill work closely with KPC to plan andexecute the project by applying the lat-est and most appropriate systems inKPC operations, while developing ahighly skilled and motivated Kuwaitiworkforce.

As stipulated in the agreement, theimplementation of the new system

throughout the group will be the respon-sibility of each of the affiliates. Dupontwill assess progress at the end of thisprocess. KPC and Dupont will establish,by combining and upgrading the HSEsystems within the subsidiary compa-nies, a higher corporate level doctrineHSE System with policies, protocols,standards and guidelines, which willserve as a common umbrella for all com-panies subsidiary to KPC.

Once implemented, this project willresult in a measurable decrease in thenumber of accidents and injuries re-corded within the group. Typical reduc-tions in other Dupont engagements havebeen between 30% and 50% in incidentsover three to five years.

Emergency CasesThe extreme emergency plan for the

oil sector was finalized. A team for crisesmanagement was also formed. Crisesmanagement centres at KPC and its sub-sidiary oil companies have been linked viavisual communication system.

Health and Safety* Committees have been formed to in-

vestigate the explosion of Gathering Cen-tre (15) at Al Rawdatein Field. Recommen-dations concerning this matter were is-sued at the request of members of the Na-

tional Assembly. A comprehensive reportshowing the technical condition of the oil fa-cilities and programs for facilities repairs andimprovement was prepared.

* Pipelines inspection program has beenexecuted to make maintenance on such pipe-lines in all oil companies..

* A training centre for health, safety andenvironment was opened at KNPC.

* The number of trainees in the field ofhealth and safety reached 52,000 includingthe staff and contractors' workers.

* An additional budget of KD. 135 millionwas approved to change the site of the un-

derground bio-treatment piping in KOC’sfacilities.

Environment ProtectionA total number of 31 capital projects at

an estimated cost of KD. 370 million wasexecuted in addition to approving 38 pro-spective projects at an estimated cost ofKD. 191 million. Over 200 employees fromKOC and KNPC were trained on oil pollu-tion fighting operations.

The total estimated capital projects forhealth, safety and environment reached KD.212 million for the fiscal year 2002/2003.

KPC’s HSE Achievements

KPC, Dupont ushering a new tide of improvment

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KPC has always maintained that its roleis not restricted to managing and develop-ing the Kuwait’s oil wealth. Its role tran-scends that to include a keen interest indeveloping the Kuwaiti society as part of itssocial responsibility towards the commu-nity. This interest was reflected in the re-cent sponsorship of a student summeremployment programme organized by theTouristic Enterprises Company (TEC).

To announce this noble project, a spe-cial ceremony was held in which SheikhTalal Al-Khalid Al-Sabah, Executive Assis-tant Managing Director Corporate Projects,Government and Parliament Relations, andMedia represented the Corporation. SheikhTalal stressed that the yyouth are consid-ered the backbone of the society’s growthand development, the nation’s means in theface of future challenges and the drivingforce of human progress and advancement.

In an interview with KPC World, SheikhTalal Al-Khalid said that Kuwaiti youth havebeen given all kinds of government and pri-vate support aiming to enhance their capa-bilities and capacities and to prepare themfor their responsibilities towards theprogress of the country. Developing an ableresponsible new generation is a social re-sponsibility that KPC recognizes and has

placed on top of its priorities. He added,“Nurturing the talents of our student is thecornerstone of preparing a remarkably edu-cated and professional generation that wecan count on to shoulder the national re-sponsibilities and to manage and operatethe state departments and institutions.”

Elaborating on the role played by theCorporation in the student-trainingprogramme, Sheikh Talal Al-Khalid empha-sized that KPC gives great attention to man-power preparation and training especially asregards the youth. “Investing in the humanelement is a primary goal. The trainingprogrammes for KPC employees Corpora-tion and its subsidiaries have exceeded 2413programmes and the number of participantsexceeded 15114 participants. This only re-flects the great attention that the Corpora-tion pays to the care and rehabilitation ofthe national manpower.”

He expressed his appreciation to the TECfor executing the summer student trainingprogrammes, which he deemed” a nationalinitiative that we all agree on its importancein raising a generation capable of assumingthe future tasks.”

Khalid Al-Ghanim, Deputy Managing Di-rector for Financial and Administrative Af-

fairs at the TEC pointed out that this is theeighth consecutive year in which the com-pany organized student trainingprogrammes. He added that the charac-teristic feature of this year’s programme isthe generous sponsorship of KPC whichcame as a result of its management’s be-lief “in the importance of building our newgenerations and the its active participationin developing the Kuwaiti youth.”

Al-Ghanim said that the status and train-ing of the youth in this year’s programmewould be different from those in the previ-ous years. Emphasis would be given to de-veloping the youth’s personal skills in or-der to be able to lead an remarkable role inthe State in addition to providing good in-vestment of their time.

He said that the TEC aims to enhancethe theoretical knowledge that the youthgained in the previous period through prac-tical training so that they get the utmostbenefit and in the same time invest inknowledge because knowledge is powerand the more educated and knowledgeableperson is the more influential and powerfulin the society.

On the other hand, Mrs. Manal Al-Najjar,Head of the Training Office at the TEC, saidthat one of the most important aims of theprogramme is to deal with the students asemployees. The student is expected tohandle all responsibilities honestly and dili-gently and to protect the TEC’s propertiesand reputation by adhering to work regula-tions explained by the instructions of thecompany officials about the nature of thework and the manner of executing it.

Nurturing Young GenerationKPC Official Sponsor of Student

Training Programme

By: Rawabi Al-Banai

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Students have their Say

KPC World met a number of the studentswho applied for the programme. StudentAbdulah Al Naser, who graduated recentlyfrom secondary school, said that he intendsto study at the Theatrical Arts Institute be-cause he loves theatrical arts.” Participat-ing in this programme was with the aim ofutilizing my free time in summer especiallythat I am not travelling outside the country.I decided to enter this experience to learnand gain a new experience which will defi-nitely help me plan my future career prop-erly and to spend my time in a useful way.”

On the other hand, student AbdulrahmanAl-Beshr said, “learning all that is new anduseful was one of the most important aimswhen I registered for this programme. Inaddition, what I heard from my colleagueswho have gone through this experience be-

fore and benefited from living the work at-mosphere at a young age, made me insistmore on undertaking the experience.”

Yousef Al-Arfaj pointed out that buildingsocial relations and a wide base of friendswere the reasons why he decided to regis-ter for the training programme. In additionto spending the spare time in summer in abeneficial manner both from the materialand moral aspects. Al-Arfaj said “I insistedon joining this programme after I heard thatKPC is the official sponsor for this year be-cause of its reputation in the field of stu-dent training and development.”

Student Laila Fadel stressed the impor-tance of having such programmes becausethey have great benefits in developing thetalents of the youth and in spending theirspare time in useful and constructive mat-ters. She added that she was totally con-

vinced when she registered for thisprogramme as she wanted to properly planher professional career after graduationfrom the university. She intends to studymedicine like her older brother (Yousef) whois studying medicine in the USA. Laila urgedthe official bodies and institutions to followthe steps of KPC in its generous sponsor-ing of such programmes which would pre-pare a remarkable generation of youthswho are academically, culturally and so-cially qualified to enter the field of work.

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Project Kuwait :

Preservation of Natural

Resources, Autonomy

Production Activity

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ÆÆÆ q³I²*« u×½ tłu²«

A dream and a need are connected bymore than a single piece of thread or asingle fact. Seeking the assistance of for-eign companies in the Northern Fields De-velopment Project is neither a dream, noran easy option. But rather, it results from afundamental need to preserve the welfareof Kuwait and to maintain the current paceof its main source of wealth for many yearsto come. These honourable intentions havecreated a number of disputes due to fear offoreign companies’ intervention specificallyin terms of the oil wealth and more gener-ally in terms of the country as a whole. Inlight of these fears, KPC World’s interviewwith Mr. Hashem M. Al-Rifa’ie - ExecutiveAssistant to Managing Director KuwaitProject Kuwait Oil Company, a KPC subsid-iary, proved to be particularly significant.

Hashem Al-Rifa’ie senses the impor-tance of every aspect of this project. Mr. Al-Rifa’ie is a retiring man who opts to keep

as far away as possible from the usualclamor and bustle associated with workingwithin a large company. He prefers, instead,quiet thoughtfulness, allowing him to pre-pare fully for any question or query. He ex-udes confidence and possesses a ready wit.He is supremely well-prepared for anyquestion, almost sounding as if he has heardit before. His responses are far from con-ventional, because his aim is to convincerather than “to duel”. Every once in a while,he unveils a document or a piece of statis-tical information which he uses to reiteratehis point. He is both visionary and prag-matic.

Hashem Al-Rifa’ie recognizes the mag-nitude of this project for Kuwait and forforthcoming generations. He has thereforetirelessly endeavored to demonstrate boththe feasibility and the objectives of thescheme. Despite a delay in the project’s ex-ecution he is confident that matters willeventually be sorted out.

He is calm, capable and sees his role asbeing proactive. In response to our queryabout the concerns of some deputies overforeign companies undertaking the North-ern Fields development and thereby beingin a position to jeopardize national sover-eignty in relation to oil wealth, Mr. Al-Rifa’ieaffirmed the following “the NationalAssembly’s voice should be heard becauseit is the voice of the Kuwaiti people. Thediscussion it raises implies either a healthyconcern or insufficient facts. We thereforestrive to address any misunderstandingsarising from the project and to relieve theworries felt by our deputies. In fact the draftproject has been altered to be more con-sistent with the Assembly’s view.”

Diverse yet Correlated ObjectivesThe project objectives are diverse and

manifold. They extend to several areas:

economic, strategic and national. “The firstobjective is to increase the production ca-pacity of these fields to 900,000 barrels perday, instead of the current 450 thousandbpd, within three years of signing the pro-posed contracts with operators. This is avery sensitive objective, as Kuwait is pre-paring itself to produce four million barrelsper day by 2020. The demand for oil is in-creasing and the OPEC quota is determinedby the respective production capacities ofoil producing states.” It is true that BurganField oil is the cheapest in the world in termsof production cost, but it alone cannot un-dertake such an increase.

The issue is not that of a simple arith-metic formula. Mr.Al-Rifa’ie cautionedagainst the over production of fields suchas Burgan where production started in thelate thirties. Future necessities require thata relative balance should be ensured in or-der to preserve the oil reserve. Mr. Al-Rifa’iecontinued to say that: “There is a need fornew and hard production techniques. Whileproduction at the Northern fields is atpresent relatively easy because it is donein soft structure geology and sand reser-voirs using normal pumping methods at lowcost, in the future it will require secondarymethods in carbonic reservoirs of complexgeological structures. Oil will be accompa-nied by high levels of water output, whichwill raise corrosion problems thereby rais-ing production costs and lowering return”.

The production capacity of the NorthernFields is only one of many objectives, in-cluding:

- Maximize reserves through effectivereservoir management practices.

- Develop Northern Fields reservoirs inthe most cost effective manner.

- Develop some of the most difficult res-ervoirs.

Hashem Al-Rifa’ie

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- Train and create job opportunities forKuwaiti nationals.

- Gain access to, transfer and settle thelatest and most appropriate technologiesrelated to development operations.

“This is not just an economic project; itis also a strategic project, carrying out sev-eral goals both for Kuwait and for the Ku-waiti people.” He added that the project’soverall concept is to reach the best priceunder the best contractual condi-tions in order to achieve all the ob-jectives.

Why foreign companies?

To say that the oil industry iscostly and requires great expertisethat is only available from foreigncompanies is not sufficient to justifyall the aspects involved in such anenormous project. Here time is of theessence, because the goal is toreach the targeted production lev-els and achieve the production strat-egies as quickly as possible. Mr. Al-Rifa’ie gives an example of this con-cept: “It is possible, for instance, forKuwait Oil Company to undertake therequired job within say seven years,to pass through the various stagesof experimentation and to graduallyacquire the needed expertise and technol-ogy. But in effect we will be wasting time,particularly in view of the established ob-jectives, not to mention the high risk asso-ciated with such a development. The costwill be also higher. In contrast, seeking theassistance of foreign companies will saveus time, cut production cost and hence re-sult in considerable savings to the treasury.”

Acquiring technology necessitates assis-tance from leading companies in the field.

Therefore, several other justifications canbe added for seeking the support of foreigncompanies:

- Maximize the economic return throughreducing technical and financial risk pro-file, increase production efficiency, employand establish the most appropriate tech-nologies in reservoir management, maxi-mize producible reserves and increase thestrategic reserves, develop difficult reser-

to the foreign companies “even for thosefalling within the same site”. These prin-ciples subjugate foreign companies to thelaws of the State. The State of Kuwait ownsall assets and information related to theproject and gives priority to the nationalmanpower, products and services if they arein parity with others. The project gives norights to international oil companies in thenatural resources pursuant to the provisionsof the Constitution. It also provides for no

monopoly whatsoever.

The Contractual Form:Service Fee

Mr. Al-Rifa’ie mentioned an inter-esting point that Kuwait is changingthe internationally recognized con-tracting methods. They are now“based on new global facts that havereplaced previous circumstanceswhich justified concerns over formerforeign contracts.” The relationship isno longer as unequal as it used to be,in terms of capital, opportunities andinvestment levels. “Kuwait enjoys sev-eral characteristics that enhance itsability to make this change, namelypolitical stability, consistent currencyand free capital movement, all ofwhich are factors that put Kuwait in avery favourable position and supports

its competitive and investment environ-ment.”

The contractual form provides for “anOperating Service Agreement allowing feesonly to the foreign companies, based on ourintent to preclude forms of concession orsharing in production.”

Under this method, pools of severalqualified international oil companies “pro-vide funds required for the transfer of newtechnologies to Kuwait to develop the con-

voirs, gain modern management skills anddevelop and promote local expertise.

Unwavering Constants

The Northern Fields Development Projectallows full sovereignty of the State of Ku-wait over its lands and resources. Freedomis provided in order for the Project to workproperly, to implement its own strategicdecisions, to control production policies andto exercise full rights to undertake any ac-tivity outside the scope of works entrusted

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cerned oil fields in the north with a view toincreasing the production level by about100% of their current capacity against spe-cific agreed upon fees, in order to serve theinterest of Kuwait without prejudice to theState’s rights over its natural resources inany way whatsoever.”

This form of contract with the foreigncompanies stipulates that they shall oper-ate and manage the fields and assets, pro-duce oil and hand it over to Kuwait. Theyshall also bear all capital and actual opera-tional expenses, while the State will sell oiland collect the proceeds thereof. The for-eign companies’ revenues will be collectedin the form of fees and will share with Ku-wait any cost cuts and/or production in-creases. Meanwhile, the companies’ netincome will be subject to the income taxapplicable to Kuwait. Other contractualterms include non-prejudice of Kuwait’ssovereignty over its natural resources, en-suring that companies are not given anyownership rights to the oil resources norare they allowed to determine the level ofproduction or share in the resulting profits.The foreign party’s fees are directly relatedto the transfer of technology, reduction ofproduction cost and preservation of the pro-duction rates.

These groups will make separate ratherthan associated quotations, where Kuwaitwill be in a position to choose the bestamongst them. Mr.Al-Rifa’ie explained thatthe role of these contractual forms is toreach a balanced format that is neither un-fair nor unduly generous. It took consider-able time to reach this formula. The pro-posed contract duration is principally fortwenty years.

Savings and other Benefits

This approach will make enormous sav-

ings to the State treasury throughout the“development period”, at a time when thetreasury is suffering a sharp slump in oilrevenues, which are the heart and soul ofthe State’s income.

The project will contribute to increasingproduction, maximizing and effectivelymanaging oil reserves, spurring on the Ku-waiti economy and allowing more opportu-nities for national manpower.

Now that the Iraq war is over, the oilsector’s continued insistence on the projectunveils another interesting fact. “When firstintroduced, the project was said to servecertain security purposes in the first place.We said that it has nothing to do with en-hancing the security situation; it is ratheran economic and strategic project. A veryreal need for this project still exists. If it wasa project meant to serve purely security pur-poses, our need for it now with recent de-velopments would have vanished. ”

Further Steps

The draft “economic form”, having beensanctioned by the Supreme PetroleumCouncil (SPC), will be submitted to quali-fied companies to review and make com-ments thereon. This will bring about newideas and amendments, which will then bepresented to the KPC Board and SPC.

The economic form is the basis under-lying the contract approach. The projectneeds to finalize the Terms of Referencebetween the two contracting parties, theGuidelines on Permanent Development ofthe Fields and the Mechanism of Compen-sation.

Mr. Al-Rifa’ie points out that major in-ternational oil companies have been dividedinto two groups: qualified Operators, whocan operate the fields, and Non-operators,

who can join Operators in the “pools.” TheNorthern Fields constitute 12 reservoirswithin four fields that will be contemplatedin the “agreement.” The method to beadopted in production is one that ensuresthe quickest and most cost effective pro-duction.

Iraq and Kuwait Fields

Iraqi freedom and talk about the futureof Iraqi oil is expected to attract foreigncompanies, yet exerted no impact upon theNorthern Fields Project. Mr. Al-Rifa’iepointed out that “the need and the conceptare purely Kuwaiti. We should not forget thatthe objectives set for the project were notlinked to regional factors.”

He believes that “it is still too early toassess how far the latest developments inIraqi oil have impacted upon the oil com-panies’ interest in Kuwait’s Northern Fields.Undoubtedly huge contracts are lying aheadin Iraq and these require enormous capa-bilities. But investors do not look only at thesize of contracts; they are also concernedabout stability.This does not mean that wehave to wait forever. Foreign companies’interests spread throughout the world, thereis competition, and there are markets andopportunities everywhere. The focus hereis to ensure a timely start.”

According to the project schedule, it wasplanned for Kuwait to reach 900 thousandbarrels from the northern fields by 2005,but the plan already lags behind. Al-Rifa’ieasserts: “It is surely not in the best interestof Kuwait to keep waiting forever.”

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Kuwait National Petroleum Company(KNPC) has recently established a hydro-gen pipeline from Shuaiba Refinery to MinaAl-Ahmadi Refinery. This ensures the re-quired quantity of hydrogen necessary forthe Solar Oil Treatment Unit. In a special in-terview, an official from Shuaiba Refinerysaid that the completion of this project cameas a substitution for the construction of anew unit at Mina Al-Ahmadi Refinery for thesame purpose. The current capacity of thepipeline reaches 20 million cubic feet daily,but its maximum capacity is 30 million cu-bic feet.

Bakhit Al-Rasheedi, Director of Techni-cal Services at Shuaiba Refinery, explainedto KPC World the considerations and goalsof this project, which came into operationseveral months ago. The project exercisedhigh standards of safety, security and tech-nology. He noted that over the past twoyears the de-sulphurizing process has ne-cessitated large amounts of hydrogen. If thisprocess is to be maintained in the near fu-ture, then an even greater quantity of hy-drogen is required.

Mr. Al-Rasheedi also discussed KNPC’smajor new projects and also those that aredue for completion in the coming years.Such plans are aimed at improving the qual-ity of KNPC’s products. The details of theinterview are as follows:

Goals

Mr. Al-Rasheedi explained some of thebenefits of KNPC’s new hydrogen pipeline,“there are three hydrogen producing unitsat Shuaiba Refinery, which meet the needsof the refinery and provide a surplus when

Five New Projects to Improve

Products, Reduce Pollution

Refining Activity

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all three units work at full capacity. There-fore, the hydrogen pipeline was constructedto provide Mina Al-Ahmadi Refinery with thehydrogen required for the Solar Oil Treat-ment Unit instead of constructing anothersimilar unit at Mina Ahmadi Refinery.”

He added, “the percentage of sulphurcontained in diesel has already been re-duced from 1% to 0.5% through a processthat requires the consumption of additionalamounts of hydrogen in the manufacturingprocesses. And as the aim is to reduce thesulphur percentage even more in the nearfuture, an even greater amount of hydro-gen will be required.”

Standards and Technologies

According to the statement given by theDirector of Technical Services at ShuaibaRefinery, the project consists of the follow-ing:

1. Compressor for pumping feed gas tothe hydrogen production units.

2. Feed gas pipeline with a diameter of8 inches and 2.3 km long.

3. Hydrogen pipeline with diameter of 10inches.

4. Full control system.

The new compressor is based on a newtechnology that uses nitrogen instead ofseal oil in the sealing process.

The project is established in accordancewith international technological, safety andsecurity standards:

1. Interlock system for the gas compres-sor which can be shut off in emergencies.

2. Finding the compressor’s on/off switchsystem in both the location and the centralcontrol room for immediate control in emer-gencies.

3. MOV valves in the compressor and thegas pipeline.

The maximum production capacity of theproject, Mr. Al-Rasheedi pointed out, is es-timated at about 30 million cubic feet perday. After three months of operation, the

daily production capacity has reached 20million cubic feet.

Product Quality and the Environment

Mr. Al-Rasheedi summarised other KNPCprojects that also aim to improve petroleumproduct standards and help reduce emis-sions:

The boiler and heating furnace upgrad-ing project: aims to reduce sulphur oxidepollutants released from the furnaces’chimneys as well as improve the furnaces’thermal efficiency. The project is expectedto be completed in July 2003 at a cost ofKD. 48 million. The project will:

-Provide heating furnaces with hearthsfor reducing nitrogen oxide emission.

- Remove sulphur substances from fur-nace gas.

Flare Gas Recovery Project: aims torealise economic return for the refinery andreduce air pollutants through re-using flaregases as furnace fuels after being treated.The project was completed in January 2002and is currently in full operation. The projectcosts amounted to KD. 5.7 million.

TGT Project: aims to reduce emissionof sulphur oxide pollutants from the residualexhaust gas incinerator at the Sulphur Ex-traction Unit through treatment of the gasesin order to extract more sulphur. The projectcost has reached KD. 15.8 million and isexpected to be completed in November2004.

Sulphur Extraction Modernizing UnitProject: aims to increase the efficiency ofsulphur extraction, using oxygen saturatedair. The cost is KD. 6.4 million and is ex-pected to be finished in November 2004.

Industrial Drainage Treatment Project:aims to treat industrial drainage releasedfrom the refinery into the Tertiary TreatmentUnit in order to reduce bio-oxygen, ammo-nia and sulphur pollutants to their recom-mended levels. The cost of this projectstands at KD. 20 million and completion isexpected in 2006.

The reduction of sul-phur contained in die-sel is met by KNPC’s30 million cubic feetper day Hydrogen

Pipeline that stretchesfrom Shuaiba Refinery

to Al-Ahmadi.

Bakhit Al-Rasheedi

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Kuwait Petroleum Corporation repre-senting the Petrochemical Industries Com-pany (PIC) has chosen the American com-pany, Dow Chemicals as its partner in theSecond Olefins Project. It is now certain thatthe two sides will shortly commence imple-menting the plan to construct a plant forthe production of ethylene and its deriva-tives in the Shuaiba Industrial Zone. A con-tractor for the management of the Aromat-ics Project has also been selected, and inthe near future the manufacturing equip-ment contractor will be chosen. The plantwill be located in the Shuaiba IndustrialZone near the Olefins Project and Equate.

The Dow Chemicals Company is inter-nationally recognized as one of the fore-most producers of chemicals, plastics, ag-ricultural products and consumer marketservices. Its annual sales are valued at $28billion and occur in more than 170 coun-tries. The company employs 50,000 people.

The OlefinsSheikh Ahmad Al-Fahad, Minister of En-

ergy Chairman of KPC’s Board of Directors,stated that the Second Olefins Project con-sists of a plant for transforming ethane gas,which is produced by the Kuwait NationalPetroleum Company, into ethylene. Ethyl-ene is to be used for the production of poly-ethylene and ethylene glycol.

According to the agreement, it has alsobeen decided to set up a factory to producestyrene. The raw materials necessary forstyrene production will be provided by theSecond Olefins Complex and the AromaticsComplex.

Sheikh Ahmad Al-Fahad said that eachside would contribute to the success of theproject by providing feedstock and the ba-sic infrastructure required, as well as state-of-the-art technologies and technical skills.

He mentioned that the establishment ofthe Olefins Complex is a response to the

KPC Gives Private Sector a BoostDow Chemicals:

Second “Olefins” Partner

Petrochemicals Activity

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KPC’s strategic plan. This calls for an ex-pansion in the manufacturing of petro-chemicals in order to add value to Kuwait’shydrocarbon resources. “It is a step that willstrengthen the international presence of thePetrochemical Industries Company,” heconfirmed.

In the same context, Sa’ad Al-Shuwaib,Chairman of the Board of Directors andManaging Director of PIC, explained that theSecond Olefins Project includes a crackingunit that transforms ethane gas into ethyl-ene with a production capacity of 850,000metric tons per year. An ethylene glycol pro-duction unit with a production capacity of600,000 metric tons per year will also beestablished.

Shuwaib added that the project wouldresult in an increase in the production ca-pacity of the existing polyethylene produc-tion unit, which uses Unipol technology, inorder to absorb the additional quantity ofethylene.

AromaticsRegarding the Aromatics Project, the

Minister of Energy confirmed that the con-tractor for managing the project has alreadybeen selected. The plant will be located inthe Shuaiba Industrial Zone near the Ole-fins Complex and Equate. The Ministeradded that the oil sector is in the final pro-cess of choosing the manufacturing tech-nology.

Sheikh Ahmad noted that the AromaticsProject consists of a parazalene and ben-zene production unit, which will be used toproduce styrene in the Second Olefins Com-plex.

The total capacity of the styrene factory,according to Shuwaib, will be 300,000metric tons a year. “Ethylene from the Sec-ond Olefins Complex and benzene from theAromatics Complex will allow production tooccur.”

Integration and Multiple Opportunities

Regarding the projects’ vision, which isin line with the oil sector’s overall strategy,Sheikh Ahmad Al-Fahad emphasized thatKPC “aims at achieving integration betweenthese huge projects by locating them nearto each other. This will have a major posi-tive effect on their economics and their op-timum operation.”

He emphasized the numerous benefitsthat these projects will achieve for the Stateof Kuwait, among them “strengthening thevalue added to the hydrocarbon resources,bringing technology to the country, and pro-viding job opportunities for qualified Ku-waitis”. He went on to say that similar jobopportunities will be opened up to Kuwaitisthrough contractors who will be given thescope to contribute to the implementationof these projects.

It is worth mentioning that Kuwait’s pri-

vate sector has a share in the two projects,which each cost US $2 billion. The Ministerof Energy said that the Petrochemical In-dustries Company is working “to developthe best means of participation” for Kuwait’sprivate sector. He extended his apprecia-tion to the management and employees ofthe Company for the efforts they have madein studying the two projects and their rolein negotiating with foreign partners.

The Petrochemical Industries Companyis one of KPC’s subsidiaries. It is at presentcompleting the development of its fertiliserfactories in Kuwait, with the aim of increas-ing their output to a million tons of urea ayear. It also owns a polypropylene factorywith a production capacity of 100,000 met-ric tons per year. It is being managed andoperated by Equate, which was founded in1995 as a joint venture between PIC andthe US company Union Carbide, a subsid-iary of the Dow Chemicals Company.

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Visitors to the new headquarters of the Petrochemicals Industries Company (PIC) are leftwith numerous pleasant impressions, primarily due to the aesthetic and environmentalaspects of this wonderful building. Company plants are not included within the complexarea itself, but are located a mere five km. away.The new building reflects the visual perspicacity of both the oil sector authorities, and themanagement of PIC as represented by Sa’ad Al-Shuwaib, Managing Director and Chair-man of the Petrochemical Industries Company. The two respective bodies are clearly de-termined to ensure an idyllic working atmosphere which follows all environmental condi-tions. The objective is to make people feel at ease in their workplace, allowing them toenjoy not only a sense of tranquillity but also a tangible sense of advancement. Such adetermination also mirrors a highly developed attitude of responsibility towards the envi-ronment.In an exclusive interview to KPC World, Mr. Shuwaib focuses on the numerous activities ofPIC, as well as the new dynamics of its relevant work since the inauguration of the newcomplex.

PIC: Competitive Rivalry in

Regional,Global Spheres

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Petrochemicals Activity

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Situated in the Sabahiyeh residentialarea, near the Fahaheel expressway, thestriking complex enjoys various perfect en-gineering features much to the satisfactionof the company’s higher management andstaff. Interestingly, this is the first time sinceits establishment 40 years ago that the Com-pany has enjoyed such stability, and ends along period of impermanence defined bymoving from one rented building to another.

The three floor complex also includes abasement and 4 adjacent buildings. It canaccommodate 350 employees, and lies inthe middle of a 37000 m2 plot of land. Thebuilt-up area itself occupies only 17200 m2(48% of the total area). The remaining 19800m2 has been delightfully landscaped to in-clude gardens, car parks and other facilities.There is also a mosque, a large two-storeymulti-purpose hall, a VIP reception hall, anexhibition room, a library, fully-furnishedtraining rooms, a clinic to treat common ill-nesses in addition to emergency cases anda number of other meeting rooms.

During the inaugural ceremony under thepatronage of H. E. Sheikh Ahmad Al-FahadAl-Ahmad Al-Jaber Al-Sabah, Minister ofEnergy, Sa’ad Al-Shuwaib said that the re-location represents an important step for-ward and ushers in a crucial new era. In the

months that followed the opening, his satis-faction with the new headquarters becameeven more apparent. He confirmed that“many spatial, technical and specializedservices are available at the new complex”,and went on to praise the building’s ideallocation because it allows easy access tothe company’s plants and their related fu-ture projects at Al-Shuaibeh port. This willenable the Company to incorporate new ac-tivities into their already busy schedule pro-viding PIC with the opportunity to competewith similar companies both within the re-gion and all over the world. He added that“...directly or indirectly, a great deal of moneywill be saved by moving into the presentcomplex. Other beneficial factors generatedby the move are related to the psychologyand morale of employees, as well as the im-provement to our production levels, whichwill all be mirrored by the Company’s posi-tive regional and global position in the com-ing years - God willing.” Al-Shuwaib empha-sized that the complex will help employeesto perform well in their jobs whilst also al-lowing them to enjoy greater fulfilment,thereby helping them to better cope withwork-related stress and accompanying re-sponsibilities.”

ENVIRONMENTAL PRIORITIESMr. Al-Shuwaib’s sensitive speech en-

couraged us to gain more details about twoparticular points that have always beenpresent; namely, concern for the environ-ment and the establishment of pleasant, safeworking conditions for the staff.

To begin with, top priority was given tomatters of security, safety and environment,concerns which have become part and par-cel of oil sector policy in Kuwait. The Chair-man of the Company drew our attention tothis fact which, he said, had occupied hismind even before the regretful accidents ofthe past two years took place. “We had madepreparations for such eventualities even be-fore they unfolded, because we recognizethat every industry should serve the envi-ronment in which it exists, and follow theold motto of “Be a good neighbour”. We gath-ered a great deal of expertise together andincreased Company awareness through par-ticipating in relevant petrochemical eventsboth inside and outside Kuwait. Four yearsago we consulted Dupont, a firm whichproved to be the best in the world in mattersrelated to work safety and the environment.Dupont provides consultancy based on realexperiences. Since 1999, we have launcheda range of environmental safety programsthat supply our employees with muchneeded integrative training. Such programson various themes, aim at achieving what iscalled “the zero accident” maxim at work

Sa’ad Al-Shuwaib

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as well as ensuring clean air and water whichultimately leads to a clean environment.”

Mr. Al-Shuwaib speaks confidently aboutstaff safety. He informed us of the Company’sefforts to ensure all employees observe itsrigid safety instructions. Monthly programshave been evolved for both administratorsand workers, to follow. Special three mem-ber check teams were formed to achievethis, and to regularly inspect plants and fa-cilities, guaranteeing that security and safetymeasures are followed.

Employee inspections have been carriedout at least twice this year. Mr. Al-Shuwaibsaid that he is certain that “such measureshave effected excellent results, and is re-flected by the concerned behaviour of theworkforce in regards to the environment.”

The environment and staff safety is butone area of Company action. Another themeis the review of old factories that currentlyhave low working specifications, and carrywith them a possible safety threat. Mr. Al-Shuwaib confirmed that “With an eye to re-ducing production costs and to improving theenvironment we have implemented a num-ber of projects to modernise these factories.”He went on to say that “the cost is estimatedat being between $150 - 200 million. Thiswork will be completed within one year.”

Mr. Al-Shuwaib continued in a similar vein

by stating that the company has “...also in-troduced many new electronic systems intothe plants, thereby substituting the oldmanual system. We are committed, in coop-eration with the Kuwait Institute for Scien-tific Research (K.I.S.R.), to studying andsuggesting environmental projects and sys-tems that can measure contamination inused water before allowing it to flow intothe sea.”

Recently, the Kuwait oil sector has de-veloped an emergency plan. The Petrochemi-cals Industrial Company took relevant andadditional steps to comply with its sister oilcompanies. Mr. Al-Shuwaib talked clearlyabout such deliberate innovations: “Last Feb-ruary, we managed to decrease the largequantities of urea particles which our plantsused to emit by 50%; the decrease reached30% by last April and this pleasing progressmakes our operation safer and better.” Suchmeasures are part of a larger Company aim:“Our object is not just restricted to prevent-ing factories from contaminating the envi-ronment or threatening safety, but to achiev-ing an unpolluted environment. We are in-terested in maintaining a clean environmentboth above and beneath the land, and oursis the first Company to have expressed con-cern about contaminated underground wa-ter. In addition, the Company will be the first

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to have ISO acknowledgement; we aim athaving an ISO standard for environmentalprotection by next September. I think thatthis is the best approach we can have to-wards realizing our security and environmen-tal ambitions. Our efforts will not stop there,however, but rather will continue.”

UPDATING AND TRANSFORMATIONPROJECTS

After discussing the Company’s futureplans, conversation naturally led to past en-terprises. KPC World wanted to know whathad happened to projects like the transfor-mation of urea into “granules”, themodernisation of ammonium factories andthe improvement of contamination measur-ing systems, at a cost of K.D. 150 million.

In regard to the first project - trans-forming urea into granules- Mr. Al-Shuwaibsaid that the Company is planning to raisethe daily production levels to 1750 metrictons. This plan includes a power station, con-trol systems and moving strap that joins thegranulation unit to the urea storehouses; theproject will also establish a vaporization unitinstead of the present crystallization unitwhich was discovered to be responsible forlosing 20,000 tons every year.

Work to update the 2nd Ammoniumplant, tested on 25 April 2002, has now beencompleted. Production capacity has beenraised to 835 tons per day, instead of the800 tons per day in the past. Modernisationof Urea (A) was completed on 21 July 2002,and now produces urea for commercialmarkets.

Mr.Al-Shuwaib summed up the vari-ous reasons which lie behind transformingurea into granular form as follows:

a) To improve the quality of the urea pro-duced by the Company, this in turn not onlybenefits PIC’s position in traditional markets,but also opens up new markets for this ma-terial.

b) To treat contamination problemscaused by fine particles of urea in Shuaibeh,including the work and urea export area,which causes great damage to the environ-ment, the workforce and the facilities. Thistakes into consideration that contaminationratios generated by granulated UREA isnearly zero.

c) To make use of quantities of ammoniaand urea that are lost, as nearly 9650 tonsof urea and 400 tons of ammonia can besaved every year.

d) The granulated urea that is producedcan be sold at 10 - 15$ per ton higher thannon-granulated urea.

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KUFPEC Far East Operations:

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A Company on the Grow

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Facing up to Challenges

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Currently, the company enjoys firm commitmentand unwavering support from KPC’s Board for allits existing projects so its objectives can be attained.The KUFPEC Far East operation already has a strongposition in the form of the Yacheng gas field projectand successful exploration projects in Pakistan. TheFar East region constitutes a key growth marketfor KUFPEC. Al-Behbehani states that, “the Far Eastis considered to be a thriving market and is an areaof huge potential. We continuously keep our eyesopen for any new business opportunities for KUFPECsince we have the resources, expertise and man-power.”

The enterprising manager assumed his respon-sibility as Far East manager in 1992. He came armedwith the accumulated experience of working in allKUFPEC overseas operations. “I had extensive ex-perience as a geologist and I did a lot of technicalstudies in Congo, Algeria, Pakistan, China, Vietnam,China, Tunisia, Malaysia, Sidi Al Kilani, Australia andIndonesia.” This meant that he was adept in theworking conditions of each KUFPEC project. Al-Behbehani thrives on the challenges and diversityhis job offers. “Working in different environmentsand dealing with all strata of people has its charm.At times you need to adapt and compromise to fitin to the needs of both parties - which are actuallynormal ways of conducting a successful business.”

By: Sheikha Al Tourah

The recent success of, Kuwait Foreign Petroleum Exploration Company (KUFPEC) in turning itslosses to profits is awe-inspiring. The company is driven by an unyielding determination in attaingrowth in the three major areas of revenues, profits and capital.

Until recently, reports circulated that KPC’s Board of Directors was contemplating scrapping theCompany’s operations and selling off its assets. However, a review of the Company’s strategies andthe decision of its former Chairman, Ahmed Al Arbeed, “to change its system from a functional to anasset company and dividing operations according to regions”, turned losses into profits, commentsDr. Abdulsamee Al- Behbehani, Far East Manager.

Al-Behbehani added that: “We owe Al-Arbeed a great deal for his confidence and I believe we dida good job in supporting him. We were also grateful to the support of KPC, the mother company, at atime when KUFPEC was going through a phase of uncertainty. Their decision to modify our opera-tional strategy realized the growth potential of the company, thereby enabling us to boost our con-solidated profits.”

Having a sharp sense of humour also helps. “Youneed to take things lightly at times in order to main-tain your sanity”, he jokes. “I discovered that look-ing on the bright side of things always helps andeven the most difficult problem and the toughestchallenge becomes an anecdote to narrate or afunny story to remember.”

As the veteran celebrates his 15 year anniver-sary at KUFPEC, he feels very proud of the greatsteps taken in the Far East to consolidate KUFPEC’spresence there and to continually increase its sharein an expanding market. “When operational strat-egy changed we were challenged by the produc-tion targets KPC assigned us. The target was toachieve 100,000 bpd by the year 2010 and theywant to monitor how well we will do.”

As the focus shifted from oil to gas (because itcreates potential for profit and for revenue secu-rity), KUFPEC resorted to smart acquisitions andsuccessful alliances. “We were fortunate to formtwo successful alliances in Pakistan which elevatedthe profile of KPC and its reserves. We have a $100million investment in Pakistan by acquiring a 50%share in Premier Shell assets there. We added $35to 40 million equivalent reserves to KUFPEC. Thenin 2002 we officially acquired BP’s share in the gasfields in Pakistan and by this purchase we added

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Abdulsamee Al- Behbehani

another $30 million to KUFPEC’s reserves. For thePKP Assets we have a $13 million net profit, in year2001, as compared to about $20 million expectedfor the year 2003 (Ave ROR = 18%).”

Furthermore, “we have been increasing produc-tion ever since. When we acquired these fields, ourinitial production estimate was 350 million cubic feetof gas but we now have a contract for 500 millioncubic feet of gas to supply the Pakistani market. Thereis a high demand for gas there and our objective isto dominate the market.”

KUFPEC’s Key Far East Project:Yacheng Gas Field

Al-Behbehani then proceeded to turn to the ma-jor upstream project: “Yacheng”. He opines that“KUFPEC’s greatest achievement of the 90s was thecompletion of the huge offshore Yacheng gas fielddevelopment. This has been a vital step in KPC’s policyof selectively diversifying its sources of revenues and

profits beyond Kuwait’sborders.

Shedding furtherlight on the ambitiousproject he says“Yacheng is consideredto be China’s largestfield, located in theSouth China Sea. In-deed, the gas field is ina class in its own. Theproject drastically al-tered KUFPEC’s produc-tion profile away fromoil, towards gas.”

On October 24th1995, production onthis $1.25 billion projectfirst started, and gasbegan to flow twomonths ahead of

schedule. With reserves of about three trillion cubicfeet spread over an area of 54 sq km, Yacheng wasconstructed to supply clean burning gas to Hong Kongfor at least 20 years. Perhaps the most notable fea-ture of the project is a 770- kilometre long underseapipeline, the second longest in the world after one inthe Norwegian North Sea, to carry gas under pres-sure to Hong Kong. KUFPEC holds 14.7% of theproject, with China National Offshore Oil Corporation(CNOOC) holding 51% and Atlantic Richfield Corpo-ration BP (ARCO) 34.3%.

The Yacheng Story

The Yacheng story goes back to the late 1970s,when modern China first started opening up to theworld, and ARCO entered into five years of negotia-tions with Beijing. At the time, veteran oilman GeorgeBush was US Ambassador to China, thus establish-ing his connection with the project. He was not toknow then that he would later earn a special placein the hearts of ARCO’s future Kuwaiti partners. Dem-onstrating his pride at the completion of the projectthe former U.S President said at the opening cer-emonies, “As a veteran of the energy industry, I sa-lute all who made this dream a reality.”

In 1982, the Ying Ge Hai Basin 9000 km offshore

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concession was awarded to a consortium which thencomprised of ARCO as the operator, Santa Fe Miner-als, and CNOOC. KUFPEC later assumed Santa Fe’sshare following its takeover in 1981 by KPC. In July1983, the consortium discovered gas, not oil. This,surprisingly, posed considerable problems.

The original agreement was for oil, not gas andgas cannot be pumped and stored as oil can. For agas field to be economical, it needs to be near a con-sumer or to a pipeline in order for direct transporta-tion. Unfortunately, there nothing nearby. Added tothat, were the legal problems of operating a gas fieldwhen the concession was for oil. Negotiations be-gan in late 1983 for an amendment to the originalcontract, and a supplemental agreement was con-cluded in September 1985. In the meantime, thefield was confirmed and delineated in August 1984.Development studies began in 1986 to market thegas and its condensate.

The consortium initially looked at using the gason Hainan Island and Guangdong Province in south-ern China. This plan however, proved to be impracti-cable because the economy there was mainly agri-cultural. It was particularly difficult to put the gasand a buyer together. This was compounded byChina’s requirement that major joint ventures gener-

ate enough foreign hard currency to be self-sus-taining. To do this, the gas had to be exported. Thepotential for liquefying gas by super cooling it andshipping it to Japan was explored but dismissed aseconomically unviable, even for a field of Yacheng’ssize.

Further prospects were considered. These in-volved supplying a new power station to Hong Kong,and a Hong Kong local gas distribution plant. Bothoptions required a massive pipeline, somethingwhich the consortium had never imagined. A 20-year gas sales agreement was finally reached inMarch 1992 with the Castle Peak Power Company(CAPCO), which had built a 6000 megawatt powerstation at Black Point in Hong Kong’s New Territo-ries. The agreement called for regular gas deliver-ies of 280 million cubic feet per day, commencingJanuary 1st 1996 to supply a combined cycle gasturbine facility at Black Point, and for other genera-tors at a 4100 megawatt station at Castle Peak it-self.

A further agreement was reached to provide 50million cubic feet of gas per day, plus the 350 tonnesof condensates, to local Chinese buyers on HainanIsland from March 1st 1996. The gas would supplya power plant and a fertilizer factory. The conden-sates would be marketed and distributed through-out China by tankers.

CAPCO was fortunate to be able to burn the gas.Black Point was originally designed for coal, whichpresented more environmental problems than gas.The availability of a cleaner source of energyprompted them to change the design of the powerstation accordingly.

In order to transport the gas to market, KUFPECand its partners had to build a 770 kilometre, 28inch pipeline to Hong Kong and a 90 kilometre 14inch pipeline to Hainan. These two lines cost half ofthe entire cost of the project. Building the HongKong line - laid in a record 23 weeks - was a real

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Yacheng Gas ProjectChronicle

1982: ARCO acquired the Ying Ge Hia Block in the Chinese government’sfirst licensing round with Western companies. In September 1982 an agree-ment was signed between ARCO, Santa Fe and CNOOC for the ‘Contract forExploration and Development’ of the Ying Ge Hai Basin.

1983: Yacheng 13-1 gas field was discovered.

1984: An appraisal well was drilled and the field was confirmed as a worldclass gas field with 3 TCF of gas.

1985: A Supplemental Agreement was signed for the development andproduction of gas in an effort to find a market and set up a contract. Forvarious reasons the search for the market failed.

1986/1987: Three additional appraisal wells were drilled to resolve the re-serves’ uncertainty.

1988: The “Second Supplemental Agreement” was signed. An option tomarket the gas as LNG to Japan was identified. Negotiation broke down inearly 1989.

1989: Additional wells were drilled to increase the reserve base. This wassuccessfully accomplished when the southern part of the field was suc-cessfully appraised.

1990: Discussion with Tokyo Gas as a buyer for the Yacheng LNG began.Additionally, discussions also began between two buyers in the Hong Kongarea: China light and Power (CL&P)/Exxon Energy Ltd, and Hong Kong andChina Gas Co.

1991: An agreement was reached with the electric company CAPCO in HongKong to supply gas beginning from 1st January 1996.

1992: ‘Heads of Agree-ment’ was signed inMarch 1992. A Field De-velopment Plan was pre-pared, and developmentof the field commencedwith a First production tar-get date of 1st January1996.

1993/1994/1995: Devel-opment of the Yachenggas field progressed onschedule. In October 1995first gas was commis-sioned.

1996: First productionbegan on time and withinbudget.

challenge, particularly as it had to cross the HongKong Harbour, one of the world’s busiest shippingroutes, with eight seafloor communication cables.To protect the line from accidental damage frompassing ships, it was buried at substantial depthsand covered with several metres of rocks. The firstdeliveries amazingly occurred two months aheadof schedule on October 24th, 1995.

The engineering effort which went into theproject was described as “defying the imagination”by industry experts. Over 4 million man-hours werespent by Chinese contractors and vendors. An im-portant factor was building platforms that wouldwithstand natural calamities. The South China Seais prone to typhoons and has claimed many lives.The platforms were therefore designed to withstand75-foot waves and 105-knot winds, and are in factstronger than those in North Sea.

Apart from the pipelines, the project included awellhead platform containing the drilling rig and wellcontrol equipment; a larger process platform con-taining the gas processing and compression plantin addition to power generators and living quartersfor up to 36 men. Both platforms stand in 90 metersof water. The wellhead platform has six wells, anda future platform is planned several kilometres awaywith a further six wells. On the Nanshan Shorebaseon Hainan Island the land facilities for gas and con-densate processing are located. Here also, lies thecondensate storage, a dock, living quarters, heli-pad, and offices. A gas receiving station on HongKong provides gas heating and metering.

The pipelines have the capacity to serve not onlyYacheng but also other regions. With a design lifeof 40 years, they will help to make further gasprojects in the area viable. The South China Sea isa prime area for natural gas, yet the energy indus-try is only just taking off there. It is a well-knownfact that once a pipeline and the infrastructure areimplemented, economics change. What may nothave been previously possible before, can soonbecome feasible.

The Hong Kong pipeline can be used to sendgas from other nearby discoveries to the entirecoastal region of southern China, thus boosting thealready strong economic development there. Theproject is expected to continue generating revenuesfor KUFPEC even when Yacheng’s own reserves aredepleted.

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As KUFPEC preserves its path of growth,so does its commitment to social respon-sibility. Social responsibility has always oc-cupied a high position on KUFPEC’s agendaof priorities and it places strong emphasison the important role it plays in creating abetter life for people wherever operationstake place.

The reason for this is simple: the needto create a strong positive image for thecompany. “Image is everything in today’sworld. Whatever its rights and wrongs, it isundeniably the first thing people see. Theimportance of KUFPEC’s image goes be-yond the Company itself. In many countries,KUFPEC is the only KPC or Kuwaiti pres-ence there. Consequently, people see bothKPC and also Kuwait through us. We havea national responsibility to get it right. De-spite our small size we play an integral andvital role in developing and expanding KPC’spresence in the worldwide petroleum in-dustry particularly through joint ventureswith international oil companies and for-

KUFPEC: Harmonious Co-existance

Improving the Quality of Life wherever it Operates

eign governments.”

Building a Corporate Image: To attain a successful implementation

of its strategy, “we must further expand ourcorporate image both inside and outsideKuwait. We must hone our efforts so thatother international oil companies and gov-ernments are aware of our growth aspira-tions and that we are actively seeking newbusiness opportunities. They must view usas an efficient and effective company andunderstand that our particular strengthsmake us the preferred participants or op-erators in certain kinds of projects. Humanresources are, in addition, an essential ele-ment to this. With a good image we will beable to attract high quality staff from withinthe Kuwaiti market, from within countrieswhere we operate, and from the interna-tional market. Image at the end of the daysells.”

Clearly this subject is close to his heartand his enthusiasm is apparent as he re-

counts the numerous improvement initia-tives. “When we formed the alliance withPremier we began operating in one of theoldest protected animal conservation park- the Kirthar National Park. We were liter-ally working in a desert surrounded by mag-nificent wildlife. Therefore, we were ex-tremely careful not to disrupt the ecosys-tem and we abided by all environmentalregulations. In fact, the regulations werequite strict when it came to noise pollutioneither by vehicles, seismic cars or drillingwells. So we utilised nature’s very owntransport facility. We hired 400 camels tocarry all our equipment which was a veryunique gesture and a reflection of our con-cern.”

Additionally, Premier-KUFPEC Pakistanreleased a pocket guidebook entitled“Kirthar National Park and its adjoining pro-tected areas.”

“This informative booklet describes thedifferent habitats in the park, as it is hometo more than 275 rare animal species and475 plants. The park is described as a ha-

Al- Behbehani with one of the locals

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ven for any wildlife enthusiast and thatbooklet was merely a contribution to creat-ing awareness. Naturally, environmentalactivists voiced concern that our gas pipe-line would disrupt the environment there,but funnily enough, what actually happenedwas that many animals preferred to be inclose proximity to the pipeline during themating season and in the cold season, be-cause the gas it contains is quite hot. So infact we assisted in helping endangered spe-cies to procreate and increase in number.”

KUFPEC has clearly improved the qual-

ity of life for the people in Dumbar and Bolanin Pakistan. KUFPEC, alongside its partnerPremier, demonstrated their commitment todeveloping the communities where theywork through a number of welfare projects.“We have made several substantial contri-butions to the community. We establishedcountless welfare programmes along thebeautiful Sindh River which conjures upmany childhood fairytales. These projectsinclude building schools in Bolan, provid-

ing the inhabitants of Durej in Balochistanwith clean drinking water and installinghand pumps in 25 villages, organizing stu-dents from the Dadu district to visitPakistan’s northern areas on educationaltrips, providing solar power system for thevillage of Nabi Bux Barejo, ensuring medi-cal care and building clinics.” It is thereforeapparent that the KUFPEC experience is atrue testament to all the core values thatthe company embodies.

In many countries,KUFPEC is the only KPC

or Kuwaiti presencethere. Consequently,people see both KPC

and also Kuwaitthrough us

Some of Kirthar’s rare animals

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It is the survival of the fittest in thechallengingly competitive oil industry.Only the most determined and stronglybased companies can withstand the heatof the competition and persevere. TheSuccess story of Kuwait Petroleum In-ternational (KPI) is a testimony of itsstrength. It surely but steadily is gather-ing one achievement after another andgoing from strength to strength throughsmart investments and continually look-ing for new opportunities for growth.

Sensing a major potential in Spain,KPI embarked on an ambitious endeav-our to gain a new European strongholdfor the Kuwaiti company, a KPC sub-sidiary. KPI established it KPES affili-ate in 1991 and now it has become aforce to reckon with in Spain’s fuel sec-tor.

It primarily focuses on three mainareas of business: IDS, jobbers and di-rect sales. It owns 17 outlets out of thetotal 49 IDS outlets. Its best sales comefrom its Alsasua station with sales ex-ceeding 60 million litres per year whichmakes it the largest volume outlet in theEuropean IDS network. The station’sstrategic location, on the Madrid-Francehighway, has contributed greatly to itssuccess. It attracts a large number ofcustomers estimated at 13,000 cars aday. Not content with its present suc-cesses, KPES has set its sights on big-ger goals. The company’s long term planis to achieve one billion litres sold inSpain.

As a reflection of this and to rein-force its sales and position in the mar-

ket, KPES is set to begin an extensiveupgrading package in Alsasua. KPESwill increase the number of service lanesfrom eight to twelve all equipped withhigh speed pumps. At the same time, thestorage capacity will be increased from150,000 to 410,000. Known for its at-tention to the smallest of details, KPESwill also improve the environmental as-pects of the site and will install a so-phisticated water purifying plant in placeof the existing one. To reduce danger tothe environment the piping system willalso be upgraded.

Q8 Sails, KPI’s official magazine,stated that this project falls in line withKPES’s forward integration strategy andtakes advantage of the synergies expe-rienced from offering IDS and consumerservices within the same location.

Kuwait Petroleum International Spain

From Strength to Strength

International Operations

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Production Activity

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With the advent of 2003, Kuwait ended theconcession agreement with the Japanese “ArabOil Company” for oil operations in the dividedzone between Kuwait and the Kingdom of SaudiArabia. Once the concession agreement expired,Kuwait Petroleum Corporation gave Kuwait GulfOil Company (KGOC) the go-ahead to managethe State of Kuwait’s share in the natural bountypresent in the divided zone. They were also giventhe green light to take part in joint operationswith Saudi Aramco Company for Gulf Works atAl-Khafji .

The cooperation with Aramco Company forGulf Works was particularly welcomed by theSaudis who emphasized the strong relations thatexist between Saudi Arabia and Kuwait. Theyadded that “the fraternal bonds between theSaudi and Kuwaiti governments and nations aresolid and deep-rooted. However, they are not justlimited to mutual agreements, expertise ex-change or joint political or economic coopera-tion, but are rather, a representation of the unityof religion, blood, history, and common fate. Fromthis unity comes a common goal: to work closelytogether for the progress of our mutual coun-tries by following a clear strategy and straight-forward political rules.”

A New Era:

The end of the concession agreement marks

an important milestone in the history of Kuwait.Kuwait is now in full control of the last of theforeign company concessions for the exploita-tion of the country’s oil resources. The end ofthe concession agreement does not howevermean an end to the close cooperation betweenKuwait and Japan in the oil field. Last year, Ku-wait has signed four new agreements organiz-ing relations between the two countries withregard to operations in the divided zone. Underthese agreements, the “Arab Oil Company” willfinance three operations in Kuwait totaling 3 bil-lion Japanese Yen. The first of these projects isthe rehabilitation of Kuwait Bay; a project whichwill cost 1.5 billion Japanese Yen and take overthree years. It is concerned with purifying seawater. This project will be using some of theworld’s most advanced technology. The overallaim is to improve marine environment and pre-vent water pollution. The second project dealswith upgrading the oil industry. Safety technol-ogy, oil refining processes, and current trainingmethods and safety regulations will all be up-dated. The agreement also requires Japan totrain Kuwaiti personnel in the oil industry fieldand grant scholarships for Kuwaiti students inaddition to providing field training for them inJapanese Companies.

The agreements give the Japanese the rightto buy oil for twenty years. Furthermore, thenew agreements provide the KGOC with 750

million dollars in financial support. In the contextof expertise exchange, an agreement has beensigned under which the Oil Company shares itsexperience with KGOC for the coming five years.This will ensure operations run smoothly, allow-ing the Company to benefit from the wealth ofJapanese expertise in the field of oil industry.

KGOC Launches New Logo

Since its inception in March 2002, the man-agement of KGOC has been working to securefoundations in terms of work, and the develop-ment of both a general policy and an adminis-trative structure that will secure the expertiseneeded to manage the company. board mem-bers and executives were asked to choose acompany logo which represents its purposes andobjectives. In order to select the appropriate logo,the company announced a competition to de-sign one. The criteria were as follows:

1- Simplicity.2- Reflect company activities and objectives.3- Unique in idea and design.4- Easy layout in terms of colors and type of print.

The contest attracted over 400 designs sub-mitted by 150 participants from many differentnationalities. An official committee from the com-pany was formed to select the most suitable de-sign. Three finalists were decided upon, but onlyone could be the winner. Mr. Brad Batchler, anarchitectural engineer working in Kuwait wasultimately selected. The company made someminor modifications to the design so that it wasconsistent with Aramco’s logo. The logo sym-bolizes four basic ideas:

1- Kuwait’s traditions and nobility are symbol-ized by a sail.2- The blue color symbolizes the Arabian Gulfwhere the company operates.3- A black semicircle symbolizes oil under theearth’s surface.

In addition, the billowing sail represents themovement towards a better future – a companypriority. The logo was approved and registeredwith the Ministry of Commerce and Industry inthe State of Kuwait.

End of an Era, Ushering New OneKuwait Gulf Oil Company Commences Operations

in the Divided Zone

Sheikh Ahmad Al- Fahad, Nader Sultan in the contract signing ceremony

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History of Oil in KuwaitSheikh Ahmad’s Faith

in the Future

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In 1921, Sheikh Ahmad Al-Jaber Al-Sabah became the Ruler of Kuwait. As abrave and resourceful leader, a man of vi-sion and a valiant warrior, Sheikh Ahmadsteered his people through the difficulttimes of the late 1920’s. The cultured pearlindustry had, by this time, become a seri-ous, and ultimately overwhelming competi-tor to Kuwait’s main industry, pearl diving.In spite of this, and despite a worldwidedecline in trade as the thirties began, hekept his faith in the future. This was largelydue to the presence of several strange blackpatches of a rough bituminous substance,which had long been observed in differentparts of the desert. The Ruler and his peoplewere well aware of the activities of the oilprospectors in the neighboring countries ofBahrain, Saudi Arabia and Iraq - to say noth-ing of the Anglo-Persian Oil Company’s suc-cesses in southern Iran. Expectations wereraised by the Bahrain oil discoveries of1932, and Kuwaitis were hopeful that thesesurface deposits would lead to undergroundreservoirs of a commodity which couldstimulate and revitalize their trade.

Oil Concession Agreement Signed

On December 23rd, 1934, Sheikh AhmadAl-Jaber Al-Sabah signed a documentwhich was to increase his country’s wealthand international importance: the first Ku-wait oil concession agreement granted toKuwait Oil Company Limited. Kuwait OilCompany, Ltd. was formed by the Gulf OilCorporation (presently Chevron Oil) and theAnglo-Persian Oil Company (presently Brit-ish Petroleum).

Oil Discovered

While drilling continued in Bahrain, at-tention turned to Burgan and to the recom-mendations that the technical report of Coxand Rhoades carried. Geological surveyswere carried out and the Company drilledin this area throughout 1937 and into early1938. It was here, on February 22nd, 1938that oil was discovered. Moreover, the oilwas under such pressure and in such quan-tity that it blasted through the well headvalve with such force that it could not be

controlled. It was a gusher that was “diffi-cult to hold”. Lack of sufficient drilling mudto block the hole meant that other meanshad to be found to block the well, and hadto be found quickly. Donald Campbell, thenChief Accountant, finally located a 60 footwooden pole in the town bazaar whichserved as a temporary stopper. And that washow Burgan No. 1 came to be, at 11 a.m.on a rainy Thursday morning. This first wellis still producing today.

The Silver Wheel: The Oil ShipmentOn June 30th, 1946 His Highness, the

late Sheikh Ahmad Al-Jaber Al-Sabahturned a silver wheel to start Kuwait’s firstcrude oil export aboard the tanker “BritishFusilier”.

The 30th of June, 1996 marked the 50thanniversary of exporting the first Kuwaiti oil

shipment. This enabled the State of Kuwaitto join the ranks of the world’s major oilproducers. At 7 am on 30th of June, 1946 agrand festival took place to celebrate theexportation of Kuwait’s first oil shipment.The celebration, held under the auspices ofthe late Sheikh Ahmad Al-Jaber Al-Sabah(then the Amir of Kuwait), was attended bythe country’s senior officials, the PoliticalResident of the Gulf region, the PoliticalAgent in Kuwait and an audience of distin-guished guests.

Mr. Southwell, Director of Kuwait OilCompany Ltd., London, started the event byreceiving Sheikh Ahmad Al-Jaber Al-Sabahand his companions and escorting them tothe ceremonial site, where the silver wheelhad been placed to herald the occasion.Sheikh Ahmad turned the wheel to start thefirst Kuwaiti crude oil shipment flowing

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The late Sheikh Ahmad Al-Jaber Al Sabah during the signing of the Concession Agree-ment to prospect for oil behalf of Kuwait’s government

KOC’s first offices

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smoothly through an off-shore pipeline tothe British tanker Fusilier. 10,567 tons ofcrude oil was loaded in 11 hours and 13minutes, an average of 950 tons per hour.

Mr. Southwell made a speech on behalfof KOC Ltd. Management. He voiced histhanks and gratitude for the support andassistance extended by Sheikh Ahmad Al-Jaber A-Sabah in accomplishing such anadmirable development. “Your Highness” hesaid, “the success that has so happilycrowned our efforts would never have beenpossible without your unfailing patience,loyal friendship and close cooperation.” Hethen presented His Highness with a com-memorative gift on behalf of the directorsand staff of the Company in remembranceof the occasion.

In reply, Sheikh Ahmad Al-Jaber A-Sabahsaid “Every one of my people and my friendswill rejoice with me in this happy event,which by the Grace of God will benefit ourfuture and welfare. I thank God for such anopportunity as this which will help us con-tinue with the various improvements whichwe desire for the happiness and wellbeingof the Kuwaiti people. I would like to takethis opportunity to once again thank theCompany for their valued assistance dur-ing their operations in our country. Mythanks also extend to Her Majesty’s Gov-

ernment for their help in making such op-erations a success, and to my personalfriends, the British and American membersof the Board as well as to all the Company’sstaff for their precious assistance. I am surethe friendly relationship that exists betweenus and the Company will continue in a spiritof cordiality and good will.”

Following the event was a ceremonialwar dance (Al-’Ardha) in Kuwait city. Atnight, fireworks ended the activities of theoccasion.

Over the next three decades, extensivedevelopments occurred both in the up-stream and downstream elements of theindustry: Kuwait Oil Company started refin-ing operations with the Mina Al-AhmadiRefinery in 1949. The once state-ownedKuwait Oil Tanker Company (KOTC) becamea private-sector company in 1957; KuwaitNational Petroleum Company (KNPC) wasformed in 1960 as a joint venture betweenthe government and the private sector andstarted operations at the Shuaiba Refineryin 1968. The Petrochemicals IndustriesCompany (PIC) was formed in 1963, alsoas a joint venture between the governmentand private enterprise, and started opera-tions the following year in fertilizer manu-facturing.

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First drilling rig in Bahra oil well

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In the meantime, developments had alsotaken place in the Neutral Zone, which Ku-wait shares with the Kingdom of SaudiArabia. The Mina Abdullah Refinery was builtas a result of this partnership.

The year 1974 marked a key turningpoint for Kuwait’s oil industry. During thatyear Kuwait implemented the democraticwill of its people and acquired 60% of KOCfrom BP and Gulf Oil. In addition, the Su-preme Petroleum Council was formed tooversee the country’s oil interests. The fol-lowing year, the Ministry of Oil was estab-lished in its own right, separate from theMinistry of Finance. The private sector’s40% of KNPC was acquired, followed by theremaining 40% of KOC. In 1976, the gov-ernment acquired all of PIC and 49% ofKOTC. In 1977, the Mina Abdullah refinerywas acquired from AMINOIL. With the ac-quisition in 1979 of the remaining 51% ofKOTC, the four major operating companies- KOC, KNPC, KOTC and PIC - were fullyunder State control. For the first time in his-tory, the major elements of Kuwait’s oil in-dustry were in the hands of its people.

On January 27th, 1980, Kuwait Petro-leum Corporation was formed, whichbrought together all elements of the indus-try under one holding company, thus en-abling greater and more effective control.

Nationalization of the Oil Industry

A new era of historic importance beganon December 6th, 1975 with the national-ization of Kuwait’s oil industry. In line withall other Arab oil producing states, Kuwaitbegan negotiations in the early 1970s torestore control over its own natural oil re-sources. By mutual agreements with theCompany’s two original partners, the State’sshareholding in Kuwait Oil Company wasgradually increased until full control wasachieved. On March 5th, 1975, an agree-ment was signed by the State of Kuwait andthe two oil companies (British Petroleumand Gulf Oil) giving Kuwait complete con-trol of all its oil resources.

The development of Kuwait’s oil indus-try and its pre-eminence in the world of oiltoday is of course due to the abundance ofthe God-given gift, but it depended muchon the wise direction of Kuwait’s Rulers andthe business acumen of Kuwait’s people.

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First Kuwaitis to work for drilling operations

The well head of Burgan 1-first oil producing well

Kuwaiti trainees at a workshop in Magwa

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Submit your releases, news items, ideas for articles, attendances at conferences and symposiums, reports on

visiting dignitaries and letters, to the Editor-in-Chiefof KPC World

P.O.Box: 26565 Safat - 13126 KuwaitTel.: (965) 2400960 - Fax: (965) 2407872

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