In This Issue - Kuwait Petroleum Corporation KPC Corporate

In This IssueQuarterly Magazine

Issue No. 47, January 2009

KPC MissionKuwait Petroleum Corporation (KPC), fully owned by the State of Kuwait, is one of the world’s major oil and gas companies. It is focused on petroleum exploration and production, refining, marketing, petrochemical production & sales, and transport. KPC’s mission is to manage and operate these integrated activities worldwide in an efficient and professional manner. In addition, KPC is committed to growing shareholder value, while ensuring the optimum exploitation of Kuwait’s hydrocarbon resources. KPC has an important role in contributing to the development of the Kuwaiti economy, developing a national workforce, maintaining superior commercial and technical expertise, and pro-actively managing the environmental, health, and safety aspects of KPC’s businesses.

8Why rotation became a turning point for Al-Rushaid

Khalid Al-Sumaiti: production decrease does not influence our operations

12KGOC hopes and ambitions

14

The KPC World team would like to extend their appreciation to everyone who contributed editorial material, information, and photos for this magazine issue.

CorrespondenceP.O. Box: 26565, 13126 Safat, KuwaitFax: (965) 24994991Website: www.kpc.com.kwEmail: [email protected]

Talal Al-Khalid Al-SabahManaging Director, Govermental,Parliamentary, Public and Media Relations

Editor-in-Chief

Media Relations Dept.

Editorial Team

Top KNPC priorities focus on pioneering the refining industry

26HSE Training Center... hopes and dreams

306 Sigma targets improved performance and connections with customers

34KPC implements Land and Sea Oil Spill Containment Plan

36

KUFPEC experiences are an added value for Kuwaiti economy

18

Issue No. 47 January 2009

�

As the New Year approaches, we pray to God to safe-guard Kuwait from all adversities, and keep it safe and peaceful under the leadership of His Highness Sheikh Sabah Al-Ahmad Al-Jabir Al-Sabah and his faithful Crown Prince Sheikh Nawaf Al-Ahmad Al-Sabah.

With the arrival of the New Year, we aspire to accom-plish more achievements locally and internationally. In-ternationally we hope that KPC global offices continue to play an on-going constructive role to maintain KPC’s global stature by opening new markets while, at the same time meeting its customers commitments around the globe. Moreover, we hope this New Year brings about an immense boost for international enterprises with China and Vietnam: these projects will form a ma-jor qualitative leap for KPC as its investments extend to economically emerging countries in spite of recent in-ternational financial challenges.

Locally KPC is preparing during the next few months to inaugurate the new Olefins Complex. This complex is considered to bring added value for Kuwait’s econo-my. There is an increased demand for ‘paraxylene’ ma-terial used in plastic bottles industry (with a 50%) as well as a demand for many other kinds of materials now indispensable in daily human life.

It goes without saying that current developments that KPC continues to witness -- and its international repu-tation -- is not a mere coincidence but rather originates from God-believing people who appreciate the value of their work value. They stand behind the continued prosperity in the oil sector that we aspire to in Kuwait.

The new issue of KPC World has a collection of articles which highlight a bright future. One of the most im-portant features is Kuwait's oil spill containment plan to activate international laws targeting marine and land environment preservation: this plan is based on the be-lief that humanity is the source of genuine wealth for advancement in every field of endeavour including the environment. KPC World also looks at PIC’s imple-mentation of the six sigma system that aims to improve work productivity in line with KPC’s customer base and its global position in the energy sector.

Editorial

Talal Al-Khalid Al-SabahManaging Director, Govermental,Parliamentary, Public and Media Relations

OPEC has shown its ability to face the current challenges while, at the same time, pre-serve its members rights within the current global financial cri-sis and economic recession fac-ing the global community. An emergency session of OPEC members was held recently in the Algerian capital of Wahran (for the third time in 2008) where OPEC decided to de-crease new production levels in a bid to stop price declines, stabilize the oil markets, and absorb surplus oil quantities. Effective 1 January 2009 oil production will decrease 2.2 million bpd. Since their regu-lar meeting held in July/Sep-

tember 2008, oil production approved by the OPEC energy and oil ministers will decrease 4.25 million bpd. Combined OPEC production has de-creased from 29.45 to 25.25 million bpd.

The latest round of OPEC de-cisions was based on research of current market conditions as OPEC energy and oil ministers focus on their future goals. At the top of this agenda lies the goal of balancing international market supply and demand enabling prices to settle at a reasonable level, establishing a reserve to cover any potential supply deficiency, or meet the needs of new refineries.

Prior to the global eco-nomic crisis ensuing from the sub-prime mortgage market with its domino ef-fect, OPEC announced that global oil demand would grow moderately as compet-itor’s supply would rise re-sulting in reduced demand for OPEC oil. Meanwhile, expectations indicated that continuous demand fulfilled deficiencies in the refined oil market, which would sustain high oil prices. In addition, recurring refiner-ies stop would impose more pressure on prices despite the good condition of the crude oil market.

OPEC faces global challenges

Kuwait

Organisation of the Petroleum Exporting Countries (OPEC ) OPEC decreases production by a standard million barrels per day

Libya Nigeria

Qatar

KSA

Iraq

Iran

UA

E

Venezuela

International reserves 2007

OPEC78%939 billionbarrels

Source: Organisation of the Petroleum Exporting Countries

Non OPECCountries 22%

265 billionbarrels

IndonesiaEcuador

Angola Algeria

�


Kuwait oil exports to Japan rise 64.5% last

September compared to previous year

Kuwait's crude oil exports to Japan reached 10.3 million bar-rels (343,000 barrels a day) rising for the second straight month in a row according to reports from the Energy and Natural Resources Agency which follows Finance, Trade and Industry Ministry of Japan. The report revealed that Kuwait supplied Japan with 9.4% of its crude oil needs last August 2008 as well as 8.5% in Septem-ber compared to 5.9% during the same period in September 2007.Japan is Kuwait’s largest oil importer as Japan needs 20% of annual crude oil shipments. Moreover, overall Japanese crude oil imports rose 13% last month to reach 120.88 million barrels as compared to last year: this is the first increase in four months.Concerning the Chinese market, Kuwait ranks no. 5 as a supplier of crude oil to China whose oil requirements has grown substan-tially during recent years. Further-more, reports from the Chinese Customs General Administration indicate that last August 2008 Kuwait supplied 5.1% of China’s oil needs which translates into 804,600 tons or 190,000 barrels of oil which is an increase of 35.6% compared to August 2007.Relationships between the two countries continue to move for-ward with KPC’s Beijing office and the launch of a joint-project to construct a refinery in China that uses Kuwait crude oil.

Al-Khashti: “KGOC reroutes to profitability

and oil stockpile compensation”

Badir Al-Khashti, KGOC Manag-ing Director and Chairman of the board asserted that “starting next year, KGOC will be profitable along the lines of associate oil corpora-tions especially as six months ago it implemented the 2020 strategy as it seeks to carry out its part of KPC’s main strategy -- maintaining current production levels, working to raising them, adding new re-serves through exploration opera-tions, expanding current facilities, and constructing new ones.”

Furthermore, Al-Khashti clarified: “KGOC is currently expanding: it is using a couple of drilling tech-niques to achieve its goals. The first technique is focused on explo-ration wells whereas the second is focused on developing wells -- this will even further KGOC efforts to reach 300,000 barrels per day, pre-serve production rates during the next 30 years and minimize oil op-erational costs.”

Buresli: “We aspire to transport petrochemicals and strengthen our ties”Nabil Buresli, Managing Direc-tor, KOTC Chairman of the board expressed his sincere hope that “KOTC will strengthen its collab-orative relationship to deeper lev-els of cooperation with PIC which, in turn, will manifest themselves in transporting petrochemicals using KOTC tanks as well as adding this activity to its framework of crude oil and gas transportation. This deepened relationship will enable KOTC to work in this field on a commercial scale. It has no less than 51 years of naval transporta-tion experience, and is considered to be the most experienced com-pany in the Arabian Gulf.”

Buresli also pointed out: “KOTC is implementing internationally-ap-proved systems in a bid to establish transparency between senior man-agement and employees, sharpen employee work qualities, follow-up on performance benchmarks and restructure KOTC in line with current international standards.”


�

KNPC obtains two environment

rewardsEng. Mohammad Al-Ajami, KNPC Media and Public Re-lations Manager proudly an-nounced that KNPC recently received a first place environ-mental award from the Arab Environment Ministers Council for 2008. ‘The Cleanest Pro-duction’ award was presented for the best scientific research or applied environmental work in the service, social or produc-tion sector. Moreover, the award recognized a significant contri-bution to preserving energy and natural resources, limiting pol-lution and/or developing prod-ucts to reduce environmental impact.

“In 2007-2008, KNPC took third place,” Al-Ajami remarked, “in KSA Environmental Man-agement (organized under the supervision of the Arab Organi-zation of Administrative Devel-opment based on the League of Arab States). “A KNPC delega-tion including Eng. Farouk Al-Zanki KNPC Chairman of the board and Managing Director, Ahmad Al-Jimaz Deputy Man-aging Director of Al-Shoaiba re-finery and Eng. Wadha Al-Khat-ib Environment Team Leader attended the Cairo ceremony to receive these two awards. Dur-ing the opening session at the League of Arab States General Secretariat Headquarters, Al-Zanki received the first prize on behalf of KNPC during the En-vironment Arab Ministers 20th

Cycle from Amr Mosa, the Sec-retary General.”

KNPC research for this award was based on two research papers: ‘Construction of the Torch Gas Recovery Unit in Al-Shoaiba refinery’ and ‘Construc-tion of Oil Cesspit Processing Unit and the Two Oil Cesspit Rehabilitation’ outlining their environmental importance.

Eng. Wadha Al-Khatib received the KSA Environmental Man-agement award during another ceremony of the Environmen-tal Management Arabian Con-ference opening session. High Committee Chairman and En-vironment Protection and Me-teorology Head, Prince Turki bin Nasir bin Abdulaziz attend-ed.

KNPC research paper ‘Environ-mental Information System Ap-plication at KNPC’ explained how the KNPC computer-based system is built around a group of systems and programs that provide important information to evaluate gas emissions.

KPC Profits Soar to 1.7 billion KD in First Half 2008

Ali Amer Al Hajri: KPC Reaps 300 million KD

over Budget PredictionsAli Amer Al Hajiri, KPC Manag-ing Director Financial and Ad-ministrative Affairs declared re-cently that KPC has accumulated a net profit amounting to $US6.3 billion dollars during the first half of the current financial year end-ing September 2008. There was an increase of 1 billion KD and a 143% increase during this period. By comparison, there was a sub-stantial 44% increase amounting to 543 million KD in 2007.

Al Hajiri stated that “gains during the six months ending in Septem-ber 2008 exceeded yearly budget estimate gains by 1.4 billion KD. Furthermore, KPC targets ex-pect to reach a net profit of 2.4 billion KD by 2008-2009 at the end of the current financial year assuming that Kuwaiti crude oil continues to reach export prices of US$50 a barrel based on cur-rent budget estimates.”

�


Rotation has been a turning point in my career

Al-Rushaid:

Many of us go through a turning point in our lives be it personal- or career-related. Such a change can shock, confuse or disorient some of us but for others it may be a new challenge that sharpens our determination and spurs us on to deal effec-tively with a new situa-tion now at hand.

When the KPC new board was announced last year, some oil sector employ-ees were surprised by the decision to transfer Sami Al-Rushaid from KNPC to be at the helm of KOC and the appointment of Farouk Al-Zanki as the new head of KNPC.

After precisely one year, Al-Rushaid, KOC CEO con-firmed that this major step in his life represented a rich ca-reer experience that has broad-ened his horizons: in effect it has ensured that he has a bet-ter understanding of Kuwait’s oil sector and its wide-rang-ing operations. Furthermore, KOC’s management style has leaped forward which is re-flected in the positive results


�

at KOC itself. Al-Rushaid’s transfer to KOC nourished coordination between the two large companies enabling him to see the wider picture be-cause of the firm ties between them.

KPC World met Al-Rushaid recently in his KOC office where, in spite of his many responsibilities, he took time out to clarify many important details assuring the cohesion and harmony at the oil sec-tor senior management lead-ership level. He revealed that he is completely supportive of Sa'ad Al-Shuwaib KPC CEO during this challenging period in the energy sector.

Now, as head of KOC, he brings together a wide-rang-ing set of related experiences gathered during his career as well as a flexible open-minded ability to lead KOC into a new era of development and pros-perity.

What do you think of occu-pational rotation as an ad-ministrative base?

“I believe that rotation de-velops leadership skills and broadens horizons on the ca-reer and personal stages, alike. I believe that rotation is a pio-neering concept, and one of the most effective programs. Moreover, rotation is consid-ered to be a modern global way to build a cutting-edge managerial base that helps cor-porations develop managerial teams for the future which, in turn, preserves their pioneer-ing performance.

In addition, rotation instills enthusiasm, rejuvenates ener-gy, encourages original ways of thinking and wards off tedious routines since leaders face new challenges that stir their abil-ity to innovate exposing their best talents. Rotation provides an opportunity to meet new people and to indulge in chal-lenges and experiences that give fresh new perspectives to management. It is evident that the world’s best leaders have worked in many fields. The more a leader succeeds in moving from one field to another, the more experience and knowledge they gain.

Personally, rotation is not new to me. Through long experi-ence I went through several responsibility changes dur-ing my work at KNPC. When I think back over the years I realize that I would not have gained a wide knowledge base combined with such various experiences if it weren’t for the fact that I took advantage of several different opportuni-ties that came my way.

I consider myself to be a son of the KNPC planning and finance sector where I began my career. I grappled with complex work details which enabled me to manage the company’s planning and proj-ects. And, God helped me to accomplish distinct achieve-ments and tackle many work-related opportunities and challenges.

My major career turning point came about when I

was entrusted to manage the Corporation’s refineries. I was appointed during the most unsteady and challenging pe-riod in Kuwait’s oil industry when refineries were under destructing fire. It was a new situation: I was transferred from management to the manufacturing field during the most sensitive and hardest period ever. Any failure at that stage would have been totally unacceptable but thank God I wasn’t afraid to take on this huge challenge: my biggest concern was to safeguard Ku-wait's wealth and improve the situation.

We worked as one team to apply the best measurements and systems to overcome these obstacles. Thank God, together with my determina-tion and the support of the CEO Hani Hussain (at that time), me and my colleagues achieved our targets for the refineries safely.”

Do you think your notable success at the refinery man-agement level was one of the main reasons for you to be chosen as KOC CEO?

“When I think about it, I don't believe I ever sought out this position. Throughout my ca-reer, I dealt with issues as they happened: every appointment brought along greater respon-sibilities with the determina-tion to accomplish the new designated targets. In effect, leading KNPC was merely a tool to serve Kuwait's oil sec-tor.

�


Undoubtedly, my different ex-periences at KNPC especially in the fields of operations, marketing, planning, financing and projects helped me to lead KNPC and to fulfill its goals by executing a work strategy that includes the improvement of every aspect of work. We worked hard to create work strategies that rely entirely on systems and valid procedures rather than individual people. Also we improved the admin-istrative systems and employ-ee privileges: we also started work teams and training cells systems in functional depart-ments. Furthermore, we sup-ported the work environment itself to encourage creativity and production. We developed an occupational work system to safeguard employee rights and fair demands.”

Can you comment on me-dia rumors about how you felt about the decision to appoint you as KOC CEO, transferring you to an en-tirely new field and especial-ly as you were nominated to succeed Hani Hussain?

“In contrast with what the newspapers reported, I dealt with my new position open-mindedly. I have had a deep desire to add higher value to the company I was entrusted to lead. I'm committed to ful-fill to the utmost my national responsibility that will also add another dimension to my experience.

I profoundly respect Al-Shu-waib: there are no disputes or negative feelings towards him. Actually, I was one of the first people to congratulate him in this position, and I sup-port his rotation decision. I must admit that the decision left me wondering at first but I'm completely convinced of senior management’s higher vision -- and I know for sure that oil sector’s best interest is everyone's objective.

It's my belief that Al-Shuwaib has a unique leadership style. He adopts direct communica-tion techniques: he deals with all matters instantly without allowing individual compli-ments to stand against work that needs to be done. We are in dire need of such a leader in this important phase of our oil industry history especially as we now stand on the verge of a new stage. Many practi-cal experiences have shown

that, in many cases, the goal isn't always clear right when a decision is taken, but as time passes, many issues come clear and the reasons behind the decision come to light.

On this basis, I expect my leaders to trust my vision and the decisions I took to rotate positions inside KOC. These decisions focus on the com-monweal in order to accom-plish more hopes, dreams and achievements.

I'm proud to say that oil sec-tor leaders have solid working relationships. We discuss issues within a working framework of awareness, comprehension, and transparency. There is a clear understanding and con-tinuous coordination to stay focused on the development plan.

There is also a firm agreement to support Al-Shuwaib pro-viding assistance to achieve success.”

What are your observations regarding the new position and future plans?

“Frankly, KOC is a huge enti-ty: taking responsibility to lead it is a milestone in my career. It has a completely different work culture from what I am used to. In addition, there are many challenges as my current position is linked with many governmental organizations, not to mention, supervising Al-Ahmadi city and hospital as well.

I found that the size of opera-tions, comprehensive strategy


10

and planning units at KOC exceed those at KNPC. What brought this to mind when I took charge is the unique work concept at KOC: em-ployee loyalty is astonishingly high, and it is rare to find such respect for senior management positions in the oil sector. The reasons behind this are the distinct occupational policy KOC follows: this guarantees employee rights and needs of all workers.

KOC officials gave me a warm welcome. They provided me with all the support I needed to meet the targets. We have a crystal-clear agenda to reach our targets and I have a work style based on communica-tion and interaction. At the beginning of every week, our leading committee (which was established by the former man-agement) meets to focus on four major issues: (1) increas-ing safety in light of the high number of traffic accidents in the company; (2) solving the gas flaring issue; (3) following up on key projects; and (4) forming a long term strategy to improve production. Every week we follow the progress of each of these issues in a way that allows us to cover work development monthly.”

Did rotation help you im-prove KOC operations?

“As I mentioned earlier, my transfer to KOC helped me to gain a comprehensive perspec-tive. There are joint projects between KOC and KNPC - we used to blame KOC for some

shortcomings. However, when I moved to KOC, I was able to better understand the chal-lenges each side encounters. We were able to adopt many improvements which helped us to think across borders.

For instance, gas flaring is an old issue between the two companies. It is a waste of energy and money: each side used to hold the other respon-sible. Thank God, we succeed-ed in taking some huge steps through mutual cooperation to decrease the amount of gas flaring.

One of the other projects that were accomplished smoothly is the gas production project. It is one of the projects that could have lagged behind if we weren't able to follow its evolvement thoroughly. We had some delays because of the contract company in north Kuwait. We didn't think that "this is the contractor’s prob-lem and he should deal with it alone". We took an unprec-edented decision to initialize much-needed coordination with the contractor’s team members, analyzed each and every problem, and smooth the way, removing all the causes of delay and streamlin-ing the work in progress.”

We sought aid from PIC to provide a professional welding team. Maha Mulla Hussain, PIC CEO spared no effort to make this task easier. We were able to finish the project within its allotted timeframe. In short, this success story

stemmed from our collabora-tive teamwork in every aspect of work which we consider to be one of our biggest achieve-ments.”

What do you think makes a successful leader?

“I believe that a good leader has to be a role model for ev-eryone first: they must be re-spected by colleagues and su-periors as well. A good leader must have persuasive abilities and must not use intimidating means. Leaders foster frank open-minded discussions. During meetings, I listen to all ideas and opinions: some-times different and contradic-tory opinions enrich decisions drawing attention to new ways of looking at issues that have gone unnoticed.

A good leader is one that has the courage to make decisions be it individual or collective in line with the situation at hand: some leaders allow time for deliberation and discussion while others don't. How deci-sions are made is one of the important characteristics of a successful leader. Every prob-lem should be faced and ana-lyzed using the best scientific means at hand to determine what tools to use, their priori-ties, and replacements.

I am convinced that as long as something is working properly don’t change it. Why should I? I don't believe in change alone for the sake of change. I prefer to focus my time and energy on more important is-sues.”

11


Our operations are ongoing as we seek to increase our production

Al-Sumaiti:

During the current worldwide financial crisis, oil markets are fac-ing their own major challenges. International indexes continue to point out that there is a growing recession in most economies of the world where there had previously been high growth rates. This crisis has led many oil producing coun-tries to review their own fiscal/energy strategies.

In spite of this current situation, Kuwait continues to move steadily forward to increase its produc-tion capacity to 4 million barrels a day following its 2020 Strategy to achieve KPC goals. There con-tinues to be complete coordina-tion between the marketing and production sectors to continue production operations: this strat-egy forms an integrated starting point with exploration and drilling operations to putting the oil well

on the production plan in addition to the assembly and export centers that are important elements them-selves in production operations.

KPC World met recently with Kha-lid Ali Al-Sumaiti, KOC Deputy Managing Director Exploration and Production Development to ask him about oil production oper-ations under conditions of market instability and the need to reduce production.

Al-Sumaiti began: "The production sector won't be affected by produc-tion decreases at this stage (at least) because the sector doesn't follow a limited vision that depends on pro-ducing oil, then merely selling it. Rather, it depends on a long-term strategy especially when production operations from an explored field take a considerable amount of time before it is even put on the produc-tion/export map. For instance, in

We use state-of-the-art technology in

exploration and oil drilling while taking costs into account


12

March 2006 during the time of the former Oil Minister Sheikh Ahmad Al-Fahad Al-Sabah, gas was discovered in the northern region. Two years after that announce-ment, we began gas production. In fact, full production capacity won't be completed before 2015. KOC exploration and production isn’t influenced in the long run even if current oil prices decrease even more. Following KOC’s vision, exploration continues apace: build-ing Kuwait’s production capacity is constant until we achieve our aim of 4 mbpd according to KPC’s 2020 Strategy."

that of high density. Since technol-ogy is always evolving, KOC uses every possible technology to reach its goals. In the past, drilling tech-niques and production-increase means were less developed but now well production capacity can be multiplied using certain new design techniques. During the past 20 years, the main focus was on land exploration with its many achieve-ments. Today we are preparing for naval exploration operations."

"Technology has many channels," Al-Sumaiti added. "KOC opera-tions are linked to financials. One of KOC’s permanent goals is to decrease costs while using state-of-the-art technology at the same time. We work towards this goal by work-ing closely with international cor-porations who own the technology coupled with the necessary know-how and experience to use it."

Al-Sumaiti was asked about Kuwait’s intention to create a strategic stock-pile for major industrial countries. "These countries are in constant need of oil as it is fuels the indus-trial engine,” he said. “This gives them an important reason to store an oil surplus. Kuwait doesn’t need a strategic stockpile as it actually exists on our own land. As a matter of fact, storing oil outside Kuwait is a political rather than a technical

decision if Kuwait needs it to sup-port the sale and export of oil.”

Concerning challenges facing explo-ration and production, Al-Sumaiti remarked: "Technical obstacles don't stand in the way of opera-tions development. Rather, the big-gest problem facing all oil sector employees and Kuwait generally is the decision-making mechanism especially decision-timing (which may render the decision pointless and time-consuming).

This process immobilizes progress. There are many reasons behind this but most importantly it is choosing the right person at the right time and place. Al-Shuwaib, KPC CEO wants to solve this bottleneck by using the Vision Project. We are not suffering from any technical or economic issues: Kuwait has the experts and abilities that allow it to reach the top. Kuwait has the eco-nomic ability to implement major projects. The difficulty lies around issues of decisiveness and a clear vision for the future – for example, the north fields project where no apparent decision was taken regard-ing it. I hope that the Vision Proj-ect accomplishes its goals to create technical units and capable firm leaders able to make appropriate decisions according to the needs of the work at hand."

We are moving steadily towards achieving the 2020 Strategy

Al-Sumaiti commented on produc-tion decreases: "KOC is exploiting the production decrease period by working together with the Inter-national Marketing Department. We are upgrading and maintaining assembly centers and executing new projects all at the same time. In this way, KOC is investing in produc-tion decrease with serious efforts to increase its own production. The production decrease requires a cer-tain mechanism because it is closely associated with other operations."

He also briefly commented on the use of the latest technologies in oil exploration: "KOC has undertaken several comprehensive geophysical and geological studies for the State of Kuwait in a bid to explore new fields. Currently KOC aims to use future-oriented systems to reach even deeper depths to explore more natural gas and oil particularly

13


Sanad Al-Sanad:Hopes and dreams for well steam injection

We aim to overcome technical challenges: results

are gratifying

Steam injection is a vital project that increases heavy oil production capacity to 250,000 bpd


1�

Enterprises are non-stop at KGOC as its employees aim even higher together with state-of-the-art technologies to rein-force KGOC’s position among global oil corporations. For the first time in Kuwait, KGOC recently used steam flooding technology which is a proven technology in use in many other international countries. What is new about this particular tech-nology is how it is used in the eosin layer of carbon layers (Al-Wafra area) rather than in the customary sand layers.

Steam injection technology al-lows petroleum scientists to achieve many goals that contrib-ute to increased production ca-

pacity of 250,000 barrels rather than 80,000 barrels per day. Goals such as these are met by closing off ground pores which, in turn, increases the pressure on oil to be able to extract it from even higher depths, col-lect it in certain areas to raise productive capacity while de-creasing heavy oil viscosity to prolong production operations for many years (i.e. prolonging productive oil age).

This steam injection project has 2 experimental stages followed by a third final stage that cov-ers the entire field completely. The Small-Scale Test (stage 1) was performed in 4 production wells -- 1 well was used to in-

ject the steam and 1 observa-tion well which aims to investi-gate continuous steam injection probabilities in the eosin layers as well as producing steam from oil-accompanying water.

These two main goals were met but certain technical problems with salt precipitation and pipe corrosion were handled in dif-ferent ways, and now there are ongoing trials taking place prior to the project’s next stages.

The Large-Scale Pilot (stage 2/LSP) began in 2007 at a cost of U.S.$338 million.Now near-ing completion, it is expected to be in operation in the sec-ond quarter of 2009. LSP in-cluded drilling 25 productive wells, 16 injection wells and 16 observation wells. Currently, 2 other wells are expected to be

Preliminary stages are encouraging

1�


finished drilling in December 2008. Production from the 25 combined operational wells has reached about 2000 bpd. Steam injection for LSP is expected to begin during the second quar-ter of 2009 for approximately 3 years. During this 3-year pe-riod, certain levels of analysis and evaluation will be under-taken:

• Continuous steam injection and data analysis;

• Monitoring the layers behav-ior and well productivity;

• Evaluating multi-pattern steam flood results;

• Handling normal expected problems in daily produc-tion operations; and

• Estimating final project costs in phase 2 (operation and construction costs).

Sanad Al-Sanad, KGOC Vice-President and DMD Techni-cal Affairs commented: "Trials underway are done in a limited way especially when the injec-tion process is done in a carbon layer for the first time. Sand lay-er injection is much easier than injecting a carbon layer as the carbon layer results are related to several issues, that is, oil move-ment in the well itself, change of thickness as well as daily op-erations and technical problems that may happen because of layer salt precipitations. Results and its analysis are done during drilling and steam-flooding op-erations which helped us to ex-

ecute phase 1 successfully and these results encouraged us to begin stage 2 which indicates steam arrival into the carbon layer."

He added: "The eosin layer steam injection experiment helped KGOC to gain a great deal of experience: Kuwaiti youth gained insight into how to increase the water pumping into the layers and how to recy-cle field-extracted water despite its high salinity. This pioneer-ing step spared KGOC from wasted time and revenues as this is the first time ever to use well-extracted water to generate much-needed steam for the in-jection operation."


1�

Al-Sanad clarified: "Challenges are restricted to salt precipita-tions around the pipes usually made from acetyl which can withstand high temperatures. Acetyl interacts with sulphur gas extracted from the layers which, in turn, brings with it pipe corrosion. This techni-cal challenge was evident from the project’s phase 1. KGOC is working on solving this prob-lem by following several tech-niques. Furthermore, the car-bon layer may interact with the steam to form a near-soap layer: this, however, is a probability and not a fact; but, we are pre-pared for different scenarios in spite of distinct success of the project’s stage 1."

Al-Sanad talked about the project’s economic viability es-pecially when effective produc-tion takes a long time. "The well steam-injection project is still on probation and all its stages must be completed be-fore the wider picture becomes clear,” he said. “Moreover, this is essential for decision-makers whether to move forward with the project, or stop to find most cost-effective alternate solutions. Decisions are made on sound economic criteria. Economic feasibility is cru-cial before any final decision is made.”

Al-Sanad clarified: “With this experimental importance taken into account, a KOC delegation

recently paid a visit to Al-Wafra joint operations to gain deeper insights for scientific research into this vital project, exchange information, and to make the best decisions for both compa-nies best interests."

Al-Sanad concluded: "In par-ticular, there are many hopes and dreams for the future success of mutual operations in Al-Wafra. Studies indicate that there are high heavy oil reserves in the eosin layers. If the steam injection process meets with success, the joint-operations production capacity in Al-Wafra will reach nearly 250,000 barrels a day -- not to mention light oil production too."

1�


Abdulnas ir Al-Fula i j :KUFPEC’s experiences br ing added va lue to

Kuwait ’s economy


1�

Kuwait Foreign Petroleum Explorat ion Company (KUFPEC) maintains an international reputation in oil exploration and drill-ing as it has the technical capabilities and experience to rival key international coporations.

For the past 27 years, KUFPEC has continued to expand its expertise where it works not only in the exploration and drill-ing fields, but also, at the social level mandated by the State of Kuwait. In other words, its f inancial and social roles are inter-twined. KUFPEC has built schools, paved roads and established health clin-ics/dispensaries in places of operation. KUFPEC’s philosophy is to exceed expectations in terms of its service to the community even if it means working beyond contract clauses.

Recently KPC World met with Abdulnasir Al-Fu-laij, KUFPEC Managing Director Projects Devel-opment to clarify some of the details. Al-Fulaij commented: “KUFPEC is proud of its social contribu-tions wherever it operates

even outside the boundar-ies of governmental agree-ments. KUFPEC is deeply committed to the commu-nities where it works es-pecially when KUFPEC’s investments are located in remote areas far from the main cities. KUFPEC’s ac-

tivities include construct-ing roads, building clinics and giving financial help to build schools. Recently, we contributed to build-ing hospitals in Pakistan as well as building a num-ber of schools in Indonesia and China.”

Al-Fulaij clarif ied details regarding investments in Australia: “Since the 1980s, KUFPEC has been oper-ating in Australia where it maintains an office with a distinguished group of geologists and engineers who conduct necessary scans and research studies on exploration and drill-ing. KUFPEC operates in the Australian north east-ern sea. It shares drilling and exploration rights in seven regions, and devel-opment and production

Australia’s geological scans

are ongoing as we seek solid investment

opportunities

1�


rights in five other loca-tions including Harpit and Mutiner f ields. The word ‘share’ shows that KUF-PEC cooperates with oth-er companies to explore and develop these fields. The American company Apache cooperates with KUFPEC in operational development.”

He added: “Currently we are working to develop three fields -- the Jolimar field is a medium-size gas f ield explored in 2007. Es-timated gas size is around 75 million barrels (as an initial value). We have chosen an optimum de-velopment plan for f inan-cial reasons. In addition,

we’re preparing to drill

even more wells in these

particular invested areas

to increase reserves, not to

mention continuous explo-

rations. KUFPEC is also

working to own more pro-

Australian law is very encouraging

for oil and gas investment


20

duction fields: Australian law is very encouraging for oil and gas investment. Despite current economi-cal changes, KUFPEC has many investment opportu-nities for good returns: in particular, KUFPEC has a revenue surplus by which it can expand its produc-tion resources by buying wells from crisis-stricken oil companies.”

Al-Fulaij concluded: “Gas production in Australia brings profits for KUF-PEC. These returns serve Kuwait’s economy via KPC which owns KUFPEC. There’s added value repre-sented through expertise gained in gas exploration, development, and market-ing which increases our national levels of experi-ence to serve the oil sector in general.”

The global econ-omy encourages KUFPEC to resume

operations with confidence and

success

21


Updating our commu-nication networks is a priority of the I.T. department

Khalid Al-Asousi

KNPC technology runs parallel with the best international corporations


22

The dream has become a reality. As the communica-tion guru Marshall McLu-han predicted, we can expect to live in an electronic gobal village, and indeed infor-mation technology con-tinues to penetrate every aspect of modern life in the 21st century. Our ways of doing business among other things would disappear if it weren't for the integrated worldwide electronic inter-net and satellite technolo-gies and networks we now have in place.

Major companies and corpo-rations continue to further their programs to match international developments in I.T. such as communica-tion networks. Following this trend KNPC Informa-tion Technology depart-ment dispensed with its old systems replacing them with the latest programs that reinforce KNPC’s position among key associate com-panies.

Khalid Al-Asousi, KNPC I.T. manager explained: “In association with the HR department, one of the programs that the I.T. department put into effect at KNPC was the Restruc-turing Program which auto-mates all employee-related systems. Simply by access-ing their own computer, an employee can do all his dealings online without resorting to the Employee Affairs department. Fur-thermore, they can request

23


their regular annual vaca-tion online. They can also obtain information on sal-aries, a ‘To Whom It May Concern Certif icate’ or any other certif icate from the comfort of their own off ice computer. This system saves a great deal of time and effort for the Administra-tive Affairs Department as well as employees. Previ-ously, ordering a leave of absence or getting any cer-tif icate required that an employee refers to 26 differ-ent sides when only one side can meet their needs. After implementing this system, an employee can acquire what they need without leaving their own desk.”

Khalid Al-Asousi com-mented further: “The new system improved many ser-vices for KNPC personnel including the development of the KNPC electronic gateway that helps employ-ees f ind the information they need at the click of a button. They can f ind out their remaining vacation time, times of logging in, or off work, their medical

check appointments, etc. Moreover, the new pro-grams adopted in the gate-way, which are customized for senior management, has helped support the decision-making process. Authorized personnel in senior man-agement can access KNPC financial statements at any given time, the number of employees and employee categories according to gen-der as well as nationality.”

Al-Asousi clarif ied certain gateway details: "KNPC I.T. department played an important and construc-tive rule in launching the

Oil Sector Gateway. It was instrumental in linking together all oil companies via a formidable f iber optic network. This infrastructure for the electronic gateway is the KNPC I.T. department’s specialty. In fact, it is the secret behind the Oil Sector Gateway success story. The I.T. department employees made substantial effort to establish an infrastructure that raises the oil sector’s reputation. We hope this gateway will go well beyond just taking care of activities and employee news."

Turning to the new systems implemented at KNPC, Al-Asousi added that "in December 2008, many mod-ern communication applica-tions were launched such as an interactive voice system which can receive external calls automatically trans-

I.T. is like electricity: you only miss it when it is lost


2�

ferring them to the right employee without having to enter any external numbers -- as soon as the employee’s name is mentioned, the sys-tem immediately sends the call onwards to the right person. This state-of-the-art system isn't widespread in Kuwait. It was designed to assist KNPC employees calling at any time. In the process, the old radio sys-tem was left behind. Now out-of-date it failed to meet KNPC’s current require-ments within modern jam-ming systems operated by battleships and aircraft car-riers in the Arabian Gulf. Because radio continues to be important for KNPC operations especially for calling emergency teams, KNPC implemented a digi-tal system that streamlines communication with work teams in the ref ineries. Moreover, KNPC deployed an emergency SMS system.

In the past, KNPC relied on a dedicated code paging system sent to all emergency crews. Pagers are now out-dated and ineffective so our department implemented and trained ref inery oper-atirs to use a new SMS sys-tem.”

In closing, Al-Sousi com-mented on network systems and programs. “KNPC was one of the f irst companies to upgrade its systems to match its work require-ments. About a year ago, the I.T. Department archived its email system so that when an employee sends or receives

Communication technology at

KNPC runs side-by-side with wider companies

an email, that particular email is saved in the KNPC server. This lets employ-ees save their mail without any limitation on capacity (as was the case previously). The archiving system saves the e-mails in the server so that this information can be used easily when needed.”

2�


Top KNPC priorities focus on continuing success while pioneering the refining industry

Khalid Al-Mushaileh:


2�

KNPC’s Comprehensive Plan-ning Department continues to focus on maintaining its current growth and its reputation for excellence in the crude oil refin-ing industry. To this end, KNPC spares no effort to provide the best consultation and technical analysis in the following ways:

• Preparing and updating long-term strategic plans to fulfill KPC/KNPC’s mission and vision;

• Coordinating mid- and long-term operations for KNPC refineries;

• Pioneering in providing KNPC with the best analy-sis available for performance evaluation compared with key global corporations also

working in the wider refining industry;

• Evaluating and streamlining the execution of KNPC stra-tegic projects; and

• Participating in KPC/KNPC technical committees involved in a wide spectrum of major enterprises including strate-gic modernization plans.

The Comprehensive Planning Department itself has four departments with many compe-tent engineers:

1. Strategic Planning Depart-ment responsibilities include:

- Accomplishing KNPC’s mis-sion and vision in its long-term planning;

- Providing administrative support in analyzing perfor-mance-based objectives while defining its goals. Coordinat-ing improvements in perfor-mance and monitoring sys-tems approved by KNPC to meet KNPC strategic objec-tives; and

- Preparing, coordinating and presenting different kinds of analysis concerning refining activities.

2. Production Plans Coordina-tion Department is required to fulfill these goals:

- Coordinating together with KPC and the refineries to prepare production plans that target the annual budget and operational plans for the refineries themselves and the gas liquefying plant. Defining profitabilities for the annual budget and KNPC’s 5-year plan;

- Revising the supply agreement between KPC and KNPC as well as other agreements.

Monitoring these agreements until they are signed as well as following-up their execution;

- Supervising the maintainence of the refineries’ linear pro-gramming model for inte-grated production;

- Preparing reports concern-ing evaluation and analysis of actual operation’s perfor-mance compared to KNPC plans; and

- Conducting problems-related studies, developing perfor-mance benchmarks and sub-stituting financial evaluation using the linear programming model.

3. Projects Planning Depart-ment is responsible for the following:

- Applying all important devel-opments related to enterprises evaluation and revision includ-ing the Gates system (used to approve technical studies and projects to reach appropriate and comprehensive evalua-tions);

- Preparing directives to unify styles, methods and economic structures to certify project financials;

- Revising new projects evalu-ations studied by KNPC and defining priorities to con-firm their compliance with KNPC’s strategic plan. These evaluations seek to hasten the achievement of KNPC’s goals and vision;

- Preparing KNPC annual cap-ital budget and 5-year plan related to KNPC enterprises;

- Leading KNPC’s strate-gic studies in coordination with different KPC/KNPC departments such as:

2�


Bio-fuel aims to set KNPC among

international corporaions

• Bio-fuel project financial and technical study

• Studying the use of integrated technology to transform solid fuel to gases (gasification) to produce electricity

• Studying participation in the basic oil industry

• Participating in the study of integration opportunities between the petrochemical and refining industries

4. Performance Analysis Depart-ment is responsible for the following goals:

- Coordinating refineries to gather the necessary informa-tion on performance evalua-tion standard’s observations and analysis;

- Developing and maintaining programs related to perfor-mance evaluation and revi-sion of activities;

- Monitoring actual perfor-mance of the refineries while comparing this performance with KNPC goals and plans as well as other key compa-nies; and

- Coordinating the perfor-mance study and evaluation with Solomon Company and KNPC departments.

The Comprehensive Planning Department was given the responsibility to coordinate and to lead the 4th refinery technical and economical studies. Coordi-nation with KPC departments, representatives from the Electric-ity and Water Ministry, KISR, KNPC’s three refineries and M/S Foster Wheeler (research consultants) was completed.

The study went through three different phases:

- Phase 1 included a choice between two directions. (1) to build a heavy oil/high sul-phur content (4%) refinery as well as sulfur oxide removing units for power plants and (2) to construct a refinery to pro-duce low (1%) sulphur content fuel thus dispensing with the sulphur oxide removing units. Studies confirmed that num-ber 2 was most cost-effective.

- Phase 2 involved choosing the best available manufacturing techniques and the most suit-able technologies.

- Phase 3 involved updating the project study in line with new data.

Once the technical and finan-cial studies were completed, the Comprehensive Planning Department presented the nec-essary documents to have KNPC senior management approval. Subsequently the project was submitted to KNPC board and the Petroleum High Council for their approval.

Recently we met with Khalid Al-Mushaileh, CP Department Manager to ask him about the Performance Analysis Depart-ment. Al-Mushaileh remarked: “KNPC established an inte-grated system to evaluate and analyze KNPC’s performance after its first-hand experience of the refining industry at the inter-national level in terms of compet-

itiveness and the on-going speed of the industry itself. For this reason, KNPC outlined a group of responsibilities for this divi-sion which include identifying strengths and weakness as well as suggesting appropriate solutions concerning these issues.”

Al-Mushaileh added: “This department uses a clear-cut method which includes:

- Gathering various data on a regular basis in connection with the refineries’ operational units. This data includes:

• Production capacity for every unit

• Product quality and quantity

• Consumed fuel (gas, electric-ity and steam)

• Maintenance days (stoppage) for programmed and non-programmed maintenance

• Quality of raw materials

- Establishing a database for all units to establish an opera-tional pattern to be able to identify the operational per-formance system of any unit;

- Using prevalent oil and medium-product prices as benchmarks to identify the refinery profitability as well as the main units;

- Since 1984, comparing KNPC and international refineries following Solomon study methods and systems.”

“Concerning the last point,” he continued, “many computer programs are used to gather information automatically and directly from different measur-ing devices. Sometimes, our programs are bought from the international markets and then manipulated for KNPC’s own


2�

KNPC performance evaluation system is applied successfully

to rival major companies

operational environment. These systems help management make appropriate decisions as quickly as possible in case of any per-formance-based problems. It also reinforces KNPC efforts to constantly improve its perfor-mance.”

He commented further: “Because of KNPC’s concern to use the most modern scientific standards to constantly improve performance, the Comprehen-sive Planning Department was assigned to implement the Bal-anced Performance Scorecards System to evaluate KNPC per-formance and to gauge the exe-cution of the strategic plan. This system was designed to provide senior management with obvious numeric indicators to identify all performance levels -- be it finan-cial, manufacturing operations, customer service, HSE, HR, training or internal operations quality assurance.”

“This system is considered to be state-of-the-art,” he said, “in its ability to evaluate company and employee performance whether they are oil-related, or not. All performance evaluation stan-dards were unified -- KNPC quarterly performance (BSC), KPC performance management, and KPC senior management (SMAIP).”

“Furthermore, the system was implemented successfully at the KNPC level then was applied to its refineries and different departments,” he continued. “The Comprehensive Planning Department also participated in preparing the Enhanced Bal-anced Scorecard Framework. Now KNPC is at the final stages to present these cards to Man-aging Director Deputies, the CEO himself and other KPC

leaders. Meanwhile, KNPC is adding a Managers Performance Standards (MAIP) into the Bal-anced Scorecards System. Once this is done, KNPC will move forward significantly in applying 21st century scientific systems to measure and improve company and employee performance.”

Turning to the bio-fuel project’s latest developments, Khalid Al-Mushaileh clarified: “Phase 2 includes extending and devel-oping Al-Ahmadi and Abdullah port’s refineries. Phase 2 will add a newer dimension to KNPC which strives to fulfill market demands -- refining capacity and high quality of different petro-

- Improving environmental performance as well as raising safety and reliability levels at the two refineries by improv-ing/replacing old units; and

- Creating new work opportu-nities for Kuwaiti youth by expanding the refining indus-try.”

He explained in more detail: “Recently KNPC was assured preliminary project approval from the KPC board as well as the Petroleum High Council: 245 Million KWD was dedicated to finance the project’s Phase 1 which includes:

- Initial engineering designs

- Choosing unit’s authorizer

- Preparing final estimates for project costs

- Buying long-term delivery items.”

Khalid Al-Mushaileh, CP Department Manager concluded with this comment: “Phase 1 was completed and we await final project approval from the KPC board and the Petroleum High Council.”

leum products. This strategic approach aims to make KNPC one of the oil refining leaders worldwide.”

He concluded: “The bio-fuel project general goals can be out-lined in this way:

- Following up future local and international petroleum prod-uct market demands in qual-ity and quantity -- this goal is to be done according to inter-national market near-future data;

- Expanding and improving Al-Ahmadi/Abdullah port’s refineries while elevating their technical and financial perfor-mance to secure the highest possible returns;

2�


Hafeth Al-Tannak: Providing data

bases and improving training programs are

our top priorities

Focus on KNPC HSE Training Center

KNPC Training Center is vitally important because the cen-ter gives KNPC employees the opportunity to take several HSE and first aid courses which, in turn, provide practi-cal background information to develop a safe work envi-ronment in KNPC's refineries.These programs decrease the number of industrial accidents limiting work risk.


30

Al-Tannak: We Seek to Raise Our Capacity

and Improve Training

Quality and Quantity

KPC World met recently with Hafeth Al-Tannak, KNPC Senior Engineer and Hatim Roshdi, KNPC HSE Safety Engineer to shed light on this center, its services, and capabilities.

As the interview began, Al-Tannak clarified the nature of the work at the center. "When I took on my duties as a senior engineer on March 2006, two problems existed,”said Al-Tannak: First, balancing quality and quantity as the HSE center duty is to provide training for a large segment of KNPC employees and contractors whose number ranges anywhere from 1,000-1,500 personnel in every refinery. This is a great challenge not to mention the coordination required with KNPC departments in order to train them. Secondly, There is a limited avail-ability of employee database showing which courses they have completed and which courses they need as well as their names, positions and dates of appointment.”

Al-Tannak continues: “The older sys-tem was manual and old-fashioned: it did not suit a number of refinery per-sonnel. In addition, the training data-base circulation was restricted only to the training department itself.

To solve the first problem, we im-proved our training courses, increased the available courses and ‘tweaked’ them to focus on the technical rather than theoretical aspects. As for the second problem, we overcame it by establishing a database for all KNPC employees showing what the quality and quantity of training courses was and its appropriateness for personnel in their current roles as well as those particular programs they needed to be promoted. Moreover, we saved the ac-tual employee trainee attendance list and the courses completed by them.Then this database was linked to the KNPC HR Department to facilitate easier access to information. It was

linked to all KNPC departments to allow authorized safety coordinators to follow their employee personnel training progress and make decisions regarding which courses they should take. By using this crucial database properly, available training courses in certain periods were made available as the system has the center training plan."

Al-Tannak added: "Attending courses is mandatory. Through our database, periodical reports (monthly, quarter, annually, semi-annually and yearly) are issued to allow all sections in any given department to follow their employee personnel commitments."

When asked whether the nature of training varies from one department to another, Al-Tannak replied: "Gen-erally speaking, training is unified in terms of its subjects -- training courses were chosen by HSE department to help employees accomplish their tasks more competently and effectively."

HSE Training Center Established

Al-Tannak commented: "In 2000 an explosion at Al-Ahmadi refinery spurred on the idea to establish the HSE Training Center. After this re-finery accident, KNPC adopted the SHEMS HSE system, which handles

31


following through

results helps constant programs

improvment

hazards that impact on people, prop-erty and environment by defining, es-timating and restricting these hazards as much as possible. SHEMS has 14 different elements: training is number 4. After the center was built, the Tech-nical Support Department became re-sponsible to set up training courses to limit accidents, hazards and improve safety performance. As a matter of fact, in the past few years, this center contributed to 4 million work hours without work injuries.”

Contractor Employee Training

Al-Tannak remarked: ”In spite of the high levels of training KNPC em-ployee personnel undertake, contrac-tor workers and employees in the re-fineries are actually the personnel in charge of maintenance and cleaning -- for this reason, many accidents are caused by them. On this basis, certain important focused courses were dedi-cated to contractor safety engineers for them to train their own workers. We followed this path after we faced the language barrier: the vast major-ity of the contractor’s workers speak another language other than Arabic or English.

After training, safety engineers train their own workers in their own native languages which is crucial for them to understand these particular training subjects."

Training Program Evaluation

Al-Tannak clarified: "Currently the cen-ter is evaluating employee and worker personnel once they are trained in or-der to monitor the positive impact of these training courses combined with reflecting on their performance. Soon a plan will be executed: this includes the design of a special evaluation mod-el and training center -- engineers will perform a random personnel selection operation in any area in the refineries asking certain question to test training effectiveness. They will inquire about problems that trainees encounter in order to bypass them in future training courses."

Hatim Roshdi, KNPC Safety Engineer HSE center confirmed: "The evalu-ation process includes trainers and courses. An evaluation form is distrib-uted among trainee personnel after the course has finished to gather their opin-ions about trainers, subjects, training halls, and services provided. A sugges-tion field is also provided. The center itself has 31 courses that are constantly updated, and improved. The experts from the center are national. In case of additional new courses, we benefit from the internet and personnel who received training abroad."


32

Roshdi: “Trainees

Have Access to

31 Different HSE Training

Courses.”

Al Tannak outlined the main topics re-garding the center work: "There are four areas pertaining to our work plan -- health, safety, environment, and first aid. Previously, first aid training was done by coordination between the center and Al-Ahmadi refinery medical clinic. Now it is done by coordination between the center and Occupational Development Management. Trainees segments start from the Chairman of the board office and they end with an ordinary employ-ee as well as training contractors engi-neers."

Firefighting TrainingKNPC also takes a professional approach to fight fires during the year enabling KNPC to minimize damages and the center’s role in these serious incidents. Roshdi added: "The center takes care of firefighting equipment and practi-cal courses. Highly illustrative media combined with practical drills are used to identify how fire extinguishers are used."

Al-Tannak added: "There's collabora-tion between the Training Center Safety Department and refineries firefighting

centers. There's also a schedule dedi-cated to organize shift supervisors and field operators as well as other refiner-ies workers. They are called together to the training center where a fire scenario or experiment is organized to train em-ployees on how to handle such events following the KNPC Emergency plan.”

When asked whether or not all KNPC personnel were covered by the training umbrella, Al-Tannak answered: "For the past 7 years the HSE center is doing its part, however the number of people cov-ered isn’t 100% as yet as certain groups are unable to attend the center’s pro-grams because of their particular work circumstances. Though we are trying to attract those personnel, we still need a sufficient workforce to also train those personnel who work in shifts.”

Increasing HSE Center Capacity

As the interview came to a close, Al-Tan-nak issued a challenge: "The center’s sup-port must continue in order to perform our duties at the highest levels possible: currently there are only two training halls. They cannot sustain the enormous pressures even though the center itself conducts four training programs every day divided into two shifts. Moreover, we must not forget the Fourth Refinery Project plus the increased number of trainees ensuing from it -- increasing the number of trainers and center capacity is inevitable"

33


Arif Al-Awadi

PIC Implements Six Sigma

Arif Al-Awadi: The philosophy of the new system targets improved performance and connections with customersA goal of major international companies continues to be high performance. Recently PIC acquired several ISO certificates in different fields such as ISO:90001 for quality control, ISO:140001 for the environment, and ISO:270001 for information security.


3�

reduce corporate costs while paving the way for sustained success in a highly competi-tive global marketplace.

Ambition and development remain the purposes of Six Sigma methods, which have several phases:

1. Definition: this stage is considered to be one of Six Sigma basics. It ex-plores areas where perfor-mance can be measured and improved from the customer’s point of view.

2. Measurement: this stage explores the quality level needed and the improve-ment goal is set.

5. Control: this stage in-volves the creation of im-provement benchmarks applied within adminis-tration systems to guar-antee sustained success and high performance.

Al Awadi clarified important aspects of the system itself.

"The Six Sigma system re-lies,” he says, “on a power-ful concept – that ‘an object you cannot measure you cannot improve’. Decisions depend, not on personal views, but rather on measur-able facts, figures and tables updated according to cus-tomer needs.”

He explained: “Through workshops, the actual work mechanism of Six Sigma is defined in accordance with changes in different depart-ments. Changes are defined by priority through meet-ings with departments lead-ers. Then team leaders are carefully chosen from dif-ferent departments: experi-enced teams are formed to execute these work meth-ods. They meet regularly to discuss updated information and statistics to optimum solutions for improving per-formance."

Concerning Six Sigma in KPC subsidiaries, Al Awadi added: "Sa'ad Al Shuwaib, KPC CEO has sent out an official letter requesting de-ployment of the Six Sigma system especially within the wider KPC Vision Enter-prise.”

3. Analysis: in this phase, information is gathered together to pinpoint pre-cisely where performance fluctuates, and why.

4. Improvement: this stage includes the specifica-tion and implementation of effective solutions to upgrade performance. Results measurement is redone to confirm suc-cess.

Six Sigma creates a common

language and concepts between

subsidiaries: it integrates within the

Vision Enterprise

ISO certification refers to certain international stan-dards of quality and service in different market sectors. At the same time, standards of quality directly connect with financial content based on client satisfaction.

In this regard, PIC saw a golden opportunity in the Six Sigma system to im-prove its products and raise its performance levels while expanding its PIC mission to be one of the key urea ex-porters worldwide.

Six Sigma was launched at PIC at the beginning of February 2007, following KPC CEO Sa'ad Al Shu-waib’s directives to improve work systems and styles. He also noticed a sense of open-ness which the wider petro-chemical industry continues to witness through strategic partnerships with important corporations such as ME Global and EQUATE.

Six Sigma methods are based on a set of goals and steps to improve employee commit-ment, focus, effectiveness, and work functionality. Ac-cording to Arif Al Awadi, PIC Six Sigma deployment leader, Six Sigma focuses on changing employee atti-tudes and the way they deal with customers. Changing employee/customer rela-tionships is considered to be vital and the main target of work systems in compa-nies. These positive and fo-cused kinds of relationships

3�


KPC and its Subsidiaries Implement Land and Sea Oil Spill Containment Plan

Taking it’s negative impact on human and environment into account

Important lessons learned from a 1998 Al-Ahmadi refinery oil spill provided the framework at that time for HE the Oil Minister to form a committee from KPC and its subsidiaries to revise existing subsidiary plans to deal with land and sea oil spills and to work together to issue a containment plan for KPC and its subsidiaries.

By 2000, the plan was ap-proved following International Petroleum Industry Environ-ment Conservation Associa-tion (IPICEA) guidelines for the subsidiaries to develop their own plans to deal with these kinds of accidents up to tier 2 and to prepare the neces-sary dedicated support equip-ment. At tier 3, KPC would coordinate any oil spill control operations.

Former accidents in Kuwait as well as other places world-wide have continued to in-crease awareness of the ef-fects and consequences of oil spills. This kind of probabil-ity, even if it seems remote and unlikely, prompted KPC, the local authorities, and me-dia concerns to be proactive in this regard. Should this kind of event happen in Ku-wait, an urgent need to know about the causes and effects emerges, which, in turn, puts considerable pressure on KPC and its subsidiaries. These kinds of environmental crisis need to be well-man-aged as the direct outcomes affect the environment, the financial situation and soci-ety at large, which may also in the long run bring about

higher costs damaging KPC’s reputation locally and inter-nationally.

Emergency Plan Target

The main goal is to give in-structions and provide infor-mation necessary to deal with all oil spill aspects regarding size and location as well as reduce any negative environ-mental and financial damages to KPC and its subsidiaries.

The Emergency Plan requires that KPC subsidiaries devel-op and constantly improve its emergency plan to suit first and second tier in-the-sea oil spills and leakages.

Such accidents may happen because of ‘in-sea’ facilities and pipelines, or close to the


3�

shore facilities. It s impera-tive to handle the crisis swift-ly and effectively because it may result in sea or off-shore oil spill leakages affecting employee safety, structures, the immediate community and environment.

The plan has been developed in conjunction with KPC and the Kuwait Oil Contamina-tion Combat Plan. The plan includes information about KPC’s role in coordinating support and response re-sources such as KPC/Sub-sidiaries Crisis Management Team to stop any tier 3 oil accidents in Kuwait.

Plan Domains, Authorities, and Responsibilities

Local Level (Kuwait): It is impossible to anticipate how oil spill accidents will happen, what their size will be, where they will occur or when they will happen. KPC subsidiar-ies can face accidents from different sources and differ-ent kinds of activities includ-

ing, for instance, sea/land pipelines, ship loading or naval accidents in regional waters resulting from direct-ly-owned or rented ships to transport KPC’s oil.

KPC and its subsidiaries are considered to be effec-tive partners/members of Kuwait's committee plan to combat oil contamina-tion incidents. They are in charge of response and crisis management as it pertains to the oil sector operations area (middle area) in Kuwait’s re-gional waters. They are also responsible to support those sides responsible to carry out the plan for northern and southern areas in case such accidents threaten Kuwait's shores and regional waters.

If a tier 2 oil spill becomes a tier 3 then KPC is responsible to coordinate with the par-ticular subsidiary involved by directing oil sector equipment and coordinating everyone and every organization in-volved in the State of Kuwait.

If needed, KPC may put out a request to mobilize equip-ment for tier 3 incidents from the OSRL/EARL Co. Re-sponse Center. Since 2000 KPC is an administrative Board Member of the Oil Spill Response Ltd./East Asia Re-sponse Ltd (OSRL/EARL). This is a non-profit company with three equipment centers owned by the major oil corpo-rations. The largest center is located in Southampton Eng-land; another center is located

3�


other countries where KPC subsidiaries operate. Also KPC has designed these plan to meet the local laws of these countries For example:

1. Kuwait Petroleum Inter-national (KPI): KPI has an emergency plan in place ac-cording to international laws related to oil spill accidents. KPI facilities in EU countries as well as the Kingdom of Thailand have plans linked to these country’s national plans indicating oil spill responsi-bilities for each side, expected legal requirements and the kinds of equipment KPI must provide to deal with tier 1 oil spills. In case the spills are tier 2 or 3, KPI is directly connect-ed with the proper authorities. Furthermore, all facility plans are linked with KPC (and, in the case of tier 3 incidents) through the KPI Crisis Man-agement Team. KPI also has an emergency plan in place to stop oil spills that result from KPI-rented tanker accidents: they are linked with the clos-est operation area plans as well as sea accidents in countries where KPC does not work.

2. Kuwait Oil Tanker Com-pany (KOTC): KOTC has an Emergency Plan in place to fight oil spills in all its tank-ers. The plan is called SO-PEP (Shipboard Oil Pollution Emergency Plan).

3. KPC International Mar-keting (Naval Manage-ment): This particular depart-ment has a response plan and coordination procedures in

place with rented tanker own-ers in case of oil spills at the local and international level.

The Emergency PlanThe Emergency Plan was drafted to help workers han-dling unexpected oil spills that threaten the environment. These spills are an outcome of activities and operations in a facility that fall within KPC subsidiary responsibilities in-side Kuwait, or abroad. The main target of the plan ensures that subsidiary plans are an ef-fective mechanism for stop-ping oil spills and deal with a logical integrated schedule:

• Oil spill containment emer-gency plan (land and sea), KOC;

• Kuwait containment plan for in-sea oil spills contami-nation;

• Crisis management and treatment guide, KPC;

• Extreme Emergency Plan for oil spills, KNPC;

• SOPEP, KOTC;

• Emergency Plan, PIC.

For plans to be effective, KPC has ensured that steps taken are obvious and well-known by the main KPC employees and subsidiaries. Moreover, these plans are regularly re-vised and tested through regular drills as to their effec-tiveness. KPC cooperates with KOC and KNPC to prepare annual local drill plans where-as KOTC prepares their drills following tanker locations at specific times.

in Singapore. In 2006, a Bah-raini-based center was estab-lished adjacent to one of the most congested naval trans-portation areas. This company specializes in tier 3 oil spills as it owns state-of-the-art mul-timillion dollar equipment designed to fight such acci-dents head-on. Interestingly, the company also has signed a contract with an aviation company to provide flexible services including transpor-tation of equipment to these kinds of crisis areas: the same cargo plane can also be used in oil spill combat operations using dispersive chemicals.

International Level (Opera-tions Outside Kuwait): The State of Kuwait has drafted plans for fighting oil spills in


3�

Putting the Emergency Plan into effect

Oil spill accidents are divided into separate categories based on amount of oil spilled:

Tier-1: Oil spill is less than 70 barrels. Notification is restrict-ed to the right subsidiary: KPC is only informed. Shift workers deal with these accidents.

Tier-2: Oil spills range between 70-4,300 barrels. The con-cerned subsidiary plan is acti-vated as KPC and the Environ-ment Public Authority (EPA) are also informed to take the necessary precautions for the State of Kuwait, KPC and its subsidiaries if the need arises.

Tier-3: Oil spills rise above 4,300 barrels. In this case, the State of Kuwait plans plus KPC and its subsidiary plans are put into effect.

Regarding all oil spills at sea, the naval reporter of the Com-munications Ministry is in-formed to enact the particular law, number 12, 1964. The creator of the spill is held in custody (tanker or facility) and, at the appropriate date, is tried in court.

If a tier 2 oil spill happens at a KNPC quay, the following ac-tions take place in the following order:

The KNPC freight operation supervisor informs

• KOC Al-Ahmadi port man-ager

• The refinery emergency com-munication coordination center the quay follows.

Together these two authori-ties inform other concerned teams and authorities with the involved subsidiary- KPC, EPA (Environment Public Authority) and the naval re-porter of Communications Ministry.

- KOC Emergency Plan is activated and subsidiary equipment is mobilized to contain the contaminated area.

- KNPC Emergency Plan is put into effect: both teams work together during con-tainment operations to prevent oil from reaching the coast.

- Based on requests from KNPC and KOC, KPC’s plans together with the State of Kuwait’s plans can be put into action even if the oil spill doesn't reach tier 3.

- If the incident extends be-yond the State of Kuwait’s capabilities then aid from OSRL/EARL can be re-quested through KPC it-self, or from the wider GCC petroleum corpora-tions through the Region-al Clean Sea Organization (RECSO) via KOC.

- Assistance from regional countries can be requested through the Marine Emer-gency Mutual Aid Center (MEMAC), which follows the Regional Organiza-tion for the Protection of the Marine Environment (ROPME) via the Envi-ronment Public Authority.

Finally, precautions and in-tegrated plans are the most cost-effective solutions. KPC and its subsidiaries give top priority to maintain preventa-tive measures and to improve responsiveness through reg-ular field drills and revising plans to minimize the effects of pollution on the surround-ing environment.

3�


KPC Strives to Becomea Regional Leader in Health, Safety and Environment

Submit press releases, news items, story ideas, attendance at conferences and symposia, reports on visiting dignitaries and letters to the Editorial Team at the Media Relations Department. Reproduction in any form is prohibited without prior written permission from the Editor in Chief of KPC World.

P.O. Box: 26565, 13126 Safat, Kuwait - Fax: 2499 4991Email: [email protected] - www.kpc.com.kw

Documents

In This Issue - Kuwait Petroleum Corporation KPC Corporate