Career Succession is one of the Premier Projects Currently Applied throughout the Oil Sector

Transcription

1 Quarterly Magazine, Issue No. 42, October 2007 The Steam Stimulation Project Implemented By KGOC The Biggest of its Kind Worldwide Raising Production to 100 thousand barrels per day, Upgrading the Reserves are KUFPEC s Targets Social Responsibility Programmes are of Equate s Priorities MAB Surpasses all the Oil Sector s Companies and Institutions in Kuwait Career Succession is one of the Premier Projects Currently Applied throughout the Oil Sector

2 Quarterly Magazine Issue No. 42, October 2007 In This Issue 6Aiming to Achieve 2010 Strategy Raising production to 100 thousand barrels per day is a strategic target to KUFPEC KGOC Launches 12 Largest Project of Steam Stimulation World Wide The Balanced 16 Scorecard: the modern way of measuring and evaluating performance MAB Excels in 20 Quality, Safety & Risk Management Throughout the Oil Sector Quarterly Magazine, Issue No. 42, October 2007 KPC s Mission The Steam Stimulation Project Implemented By KGOC The Biggest of its Kind Worldwide Raising Production to 100 thousand barrels per day, Upgrading the Reserves are KUFPEC s Targets Social Responsibility Programmes are of Equate s Priorities MAB Surpasses all the Oil Sector s Companies and Institutions in Kuwait Kuwait Petroleum Corporation (KPC), fully owned by the State, is one of the world s major oil and gas companies. It is focused on petroleum exploration and production, refining, marketing, petrochemical production and 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, whilst ensuring the optimum exploitation of Kuwait s hydrocarbon resources. KPC has an important role in contributing to the development of the Kuwaiti economy, developing national manpower, maintaining superior commercial and technical expertise, and pro actively managing the environmental, health, and safety aspects of KPC s businesses. Career Succession is one of the Premier Projects Currently Applied throughout the Oil Sector

3 Application of the Succession Plan Throughout the Oil Sector 26 Social Responsibility 30 Programmes is Equate s priority 34 The Clean Fuel Project, a New Strategic Leap in KNPC Negligence, Failure 38 to Follow Safety Guidelines Are Reasons for Parking Lots Fires Editor in Chief Nasser Bader Al-Mudhaf Deputy Managing Director Government, Parliamentary & Media Relations Editorial Team Media Relations Dept. The KPC World team would like to extend thanks and appreciation to all those who contributed editorial material, information and photos for this edition of the magazine. Correspondence P.O. Box : Safat, Kuwait Fax: (965) Website: media@kpc.com.kw Design, Layout & Printed by: Al-Assriya Printing Press Publishing & Dist. Co. w.l.l.

4 Editorial KPC, Strategic Targets At the beginning I would like to congratulate you on the occasion of Eid Fitr praying to Allah the Almighty to bless and cherish you. I would also like to congratulate all the employees in the Oil Sector on the generous initiative of the Supreme Petroleum Council and its approval of the recommendations related to structural salary changes for the Kuwait Petroleum Corporation (KPC) staff and its subsidiaries. These include an increase of between 10 and 25% for those on basic salaries. The Council has also decided to initiate a premium salary for the specialist positions that were identified via a survey of the local market and Gulf. All of these measures are designed to enhance KPC s reputation and to ensure its competitiveness with International companies. It is an integral part of KPC s drive to strengthen its global position, KPC. Another part of this drive was last year s introduction of the performance management system. This system guarantees autonomy for subsidiaries in regard to decision-making that affects capital projects, and helps ensure that they meet the objectives of KPC s general strategy. This issue contains a variety of exclusive topics, interviews, investigations and studies. Of particular significance, however, are the report on quality and safety in Mina Abdullah refinery, an interview with Abdul Hadi Al- Awad Managing Director KGOC about the company s new projects, and another interview with Bader Al- Khashti Managing Director KUFPEC, on the recent achievements of the company. Nasser Bader Al-Mudhaf Deputy Managing Director Government, Parliamentary & Media Relations, Editor-in-Chief

5 To Express Appreciation A Reception for KPC Customers in Singapore Following its annual custom, Kuwait Petroleum Corporation (KPC), International Marketing Sector, held a reception for its customers in Singapore-Capital, on Wednesday 12 September The KPC delegation headed by Jamal Al-Nouri, Managing Director International Marketing, included: Mohammad Al-Shatti Manager Central Derivatives Sales & National accounts Management, Kahtan Al- Abdulkarim Regional Manager KPC Regional Office, Far East, Walid Al- Abduljalil Sales Coordinator Central Derivative Sales and National Accounts Management, Mohammad Al-Qallaf Sales Coordinator Fuel Oil, Coal Oil, and Sulphur Sales Management, Haitham Al-San ea Sales Coordinator Naphtha Gas and Gasoline Sales Management, Abdul- Aziz Al-Dawsari Sales Coordinator Crude Oil Sales Management, Dakhil Al-Ruhaif Central Derivatives Sales & National Accounts Management, Mohammad Ameen Marine Administration, Youness Askenani Supply Operations Management, Masouda KPC Regional Office, Far East, Tokyo. The ceremony was attended by the Honorary Head of the Arab Diplomatic Service, Arab Ambassadors, and Senior Officials in Singapore, along with members of the Singaporean Government and Parliament, as well as a number of managers and staff members from governmental institutions and international oil companies. A great number of KPC customers were also invited to attend the event as an expression of gratitude for their immediate and long-term support of KPC as a supplier of oil and its derivatives. The reception coincided with the Asia-Pacific Petroleum Conference (APPEC) held in Singapore. Issue No October

6 Aiming to Achieve 2010 Strategy Bader Al-Khashti: Our goal is to produce 100 thousand barrels/day, to increase the reserve to 410 million barrels of oil The unique position of the Kuwait Foreign Petroleum Explorations Company (KUFPEC) is boosted daily and is gaining a worldwide reputation because of its high technical potential which continues to be developed. Its experience in the field of oil exploration spans 26 years during which time it has been influential in the arena of global competition; it extended its influence and access to sectors and concessions of 15 countries by the beginning of Regarding the success stories of KUFPEC and the signing of a series of contracts for exploration, KPC World magazine has recently met Bader Al-Khashti, Chairman of the Board of Directors Managing Director KUFPEC. 6 Issue No October 2007

7 KUFPEC has recently signed a number of contracts; one is for oil exploration in the Gulf of Suez with investments of more than $ 400 million with the Arab Republic of Egypt. Are you able to provide a little more information on this exciting new prospect? This contract is related to Jisom field South of the Gulf of Suez, which covers some 105 square kilometres. In this project, KUFPEC cooperated with the Egyptian company PICO Petroleum, a major company in the Oil Sector. The project invited strong competition from many companies, as this is the first time that the Egyptian General Petroleum Corporation (EGPC) has privatized a productive field. Fortunately we were We recently reached feasible solutions in Sudan; explorative operations will shortly begin able to secure this field, which was discovered in Its maximum production is 20 thousand barrels Bader Al-Khashti With twenty six years experience and state of the art expertise, it is no surprise that KPC is a highly reputable company within the Oil Sector Issue No October

8 per day and it currently produces about eight thousand barrels a day. We intend to develop it in the near future to restore its previous production and consequently to get the desired returns. Why did KUFPEC prefer to work in a productive field and not in new exploration concessions? This matter is governed by the strategic policy of the company which plans to reach a production of 100 thousand barrels a day by 2010, in addition to increasing the stock or company s reserves to 410 million barrels of oil. Our entry in this field was aimed at increasing production and reserves, as it is expected to increase Jisom production after it is technically developed. KUFPEC has stopped using the concession, which it obtained in southern Sudan, because of the political disputes there. What is the economic impact of this on the company? Investments in general, and those in oil in particular, are sometimes exposed to risks, and this may occur in any country, not only Sudan. Sometimes certain external factors that are not taken into account or not planned-for may intervene and these factors may influence the processes of exploration and production. Sudan is such an example, where the external factors represented in the conflict in the South, played a role in the cessation of exploration. However, we were recently able to find suitable solutions and explorations will begin once the security situation improves. There will be good opportunities for exploration with our partner in the concession, Total the French Company. Indicators show that explorations will begin soon and they will be followed by a process of developing the fields. KUFPEC has increased its investments in Egypt; it intends The African continent, is now the focus of many global companies to invest in the Ivory Coast, Algeria and Mauritania along with its investments in Sudan. What are the reasons for focusing on the African continent? As it has many unexplored places, Africa has become the focus of many international companies. There are actually some areas of Africa which remain completely untouched to this day and that is why international corporations are focusing on Africa, and particularly on its western and northern coasts. During the past 10 years, heavy investment in projects in the Arab Republic of Egypt have yielded promising quantities of oil and gas. Thus, KUFPEC concentrates on Africa, just as it has previously done and is still doing in similar projects in Asia; those regions are expected to have an excellent oil future. Are there future plans for expansion in other African countries? We are watching the markets extremely carefully, particularly the regions of Africa and South-East Asia, to take swift advantage of any appropriate and economically viable opportunity. Does KUFPEC consider entering the European and American markets after it has already entered those of Africa and Asia? When the application of 2010 strategy began in early 2001, KUFPEC s Board of Directors gave us the full freedom of expansion (KUFPEC s participating countries were 7 in 2001 while they are currently 15). Now we are concentrating on areas where we have both great experience and geological knowledge whilst simultaneously seeking to access other places and discuss investment opportunities. We are currently considering China, Russia and South 8 Issue No October 2007

9 We have a wealth of experience in South East Asia and that continues to be a focus for the company America, but as yet have not found any appropriate opportunities which would have suitable returns, but the expansion is still in force and if an economically fruitful opportunity arises, we will grasp it. Security is in a state of a malaise in the world at the present time. Does KUFPEC worry about its investments in some unstable countries? Investment in oil is of the most important ones in any country because of its good returns; that is why countries are very keen to provide a suitable and secure atmosphere for investment companies to ensure they continue their operations peacefully. The oil sector is a vital one, its investments are enormous, and it always provides many employment opportunities and huge incomes. We always bear in mind the political risks in any country we invest in to make them few and planned-for risks. KUFPEC is currently implementing the threedimension seismic survey to reduce the prospected risks in West Citra sector, Egypt. In this framework two wells were drilled early What are the results of this survey? Seismic surveys - especially 3D ones - are highly functional and essential in the process of exploration and search for oil, because they provide a clearer picture and more accurate information on the existence of hydrocarbons underground. They also provide useful information about the materials inside earth, the strata and their kinds. We always strive to reduce risks before drilling; drilling has already started in the aforementioned sites and the results are good so far. Issue No October

10 We work on a purely commercial basis. Therefore, substantial economic income is essential to our operations KUFPEC purchased 10% of the concession Western Mediterranean last September. What was the purpose of that step? We always strive to achieve the strategy that we promised the Board of Directors we would fulfil. It centres on two objectives: 1. To obtain sectors and concessions and to explore them. 2. To access productive fields, an example of which is our acquisition of Jisom in Egypt, and in the West Mediterranean, where we bought the 10% share of British Petroleum. There is a plan to develop this field to add new quantities of oil to production and reserves to achieve the strategy. What are KUFPEC plans to face the hectic competition in world markets in light of the high oil prices and the fact that most companies possess financial surpluses? Certainly competition is rapidly increasing in the global markets, especially in the field of oil explorations, but we enjoy a high reputation that is the result of our professionalism and our outstanding experience that spans 26 years, so we are welcome in many countries worldwide. To help cope with current challenges, the company has recently followed two ways to obtain exploratory concessions and productive fields: 1- Enter the competition directly even if it is very strong. However, the potential disadvantage of this is the fact that some competitors participate not for economic returns, but for other strategic targets, which raises prices unrealistically. Therefore, we are keen to know competitors before entering into any competition to ensure its economic feasibility. 2- Direct deals with companies to show them our desire to buy exploration shares or shares in productive fields. This strategy potentially offers us new areas of exploration and reduces competition, because offering reasonable prices leads to successful deals. The world has recently witnessed alliances between several companies. Are there plans to in KUFPEC to make regional or global alliances? At the outset we would like to make it clear that the coalition KUFPEC targeted is to engage with other companies for exploratory concessions or to acquire productive oil fields; we do not exclude the idea of holding alliances whether regional or international. But we prefer coalition to be in two ways: the first would be through an alliance with large firms. We are currently still seeking an appropriate, like-minded partner. The market today is tough and all companies have financial surpluses. The second preferred route is allying with medium size companies just like KUFPEC. We have alliances of this type and we have entered into several partnerships which we believe will be fruitful in the near future. One example is our alliance with Al-Hanjariya Mall Company to purchase the Pakistani Government s share from Pakistan 10 Issue No October 2007

11 We carefully monitor markets and will not hesitate to enter into all viable opportunities Petroleum Limited (P.P.L). That deal was not carried out because of the current political situation in Pakistan. What are the most important concessions KUFPEC has recently obtained? We have recently succeeded in purchasing British Gas share in Mauritania. These fields are now producing barrel per day with the possibility of increased production in the future. Kuwait Petroleum Corporation (KPC) agreed to KUFPEC s entering of the BANKAGA in Indonesia, one of the recent concessions. This field will contribute to increases in production and reserves. Issue No October

12 KGOC Launches Largest Project of Steam Stimulation Worldwide Abdul Hadi Al-Awad: Steam stimulation technique helps to develop the Eocene reservoir and benefit from the enormous reserves of oil it contains. 12 Issue No October 2007

13 Spurred by the keenness to increase production and development of oil reservoirs and to keep abreast of international developments, Kuwait Gulf Oil Company (KGOC) is getting ready to use a new technique called the Steam Stimulation Project, on which the company places great hopes due to its remarkable financial revenues and massive production of heavy oil (from about 10% to 50%). To be briefed on the new project and its functions, KPC World Magazine met Abdul Hadi Marzouk Al-Awad, Chairman of the Board of Directors and Managing Director KGOC. The project embodies a qualitative leap in the oil industry throughout the Middle East First, would you define for us the concept of Steam Stimulation and its significance? Steam stimulation means injecting steam in the incubating reservoir of heavy oil (oil of high density), in order to stimulate the reservoir and increase the capacity of extracting heavy oil; it is a process that necessitates special techniques. Steam is injected in specific pressure, temperature and flow in different places according to certain patterns, so as to lift the heavy oil in the reservoir up to the surface in larger quantities in order to increase production and make maximum use of most of the Abdul Hadi Al-Awad existing quality reserves that might otherwise be lost. This project is implemented in the area of joint operations, Al-Wafra. The project consists of two experimental phases followed by a third and final one that covers the whole field. The target is the first Eocene reservoir of the carbonate incubating layers of heavy oil (17-19 API gravity crude with 4.5% sulphur by weight9). The project will be supported by the expertise of Chevron Corporation (partner in the operations), a global pilot company in heavy oil extraction which specializes in the steam stimulation technique which will help to develop the first Eocene Issue No October

14 reservoir and utilize the enormous oil reserves available. It should be noted here that this new technique and the Multipattern Steam Flood is the first of its kind worldwide. The advantages of the project are many. It will: Represent a qualitative leap in the oil industry throughout the Middle East Produce billions of barrels from the original oil reserves (OOIP) by upgrading the recovery capacity from 10% at the present time to 50%. Provide many job opportunities. Mark a progressive step towards increasing production in the first Eocene reservoir for the coming years. The full developmental plan of the field will necessitate digging 10 thousand to 20 thousand new wells, with investments of more than 10 billion USD. What are the major components of the experimental phase of the project? The aim of the experimental of steam stimulation during this phase is to construct and complete the Financial revenues of the project will be obvious after it is applied on the entire field following: Drilling of 25 new productive wells. Drilling of 16 wells for steam injection. Drilling of 16 wells for monitoring and follow-up. A water station. 10 units for steam production. A system for steam assembly. A unit to automatically test the wells performance level. A centre for production assembly. A system for steam distribution. A system for steam recycling and recovery. A system for the treatment and disposal of water that accompanies production. A centre for engines control. A control room. A maintenance and support building in addition to electric connections, and routes needed for the project. What does the steam stimulation technique include? Designing a certain pattern according to the steam stimulation technique requires a study of the 14 Issue No October 2007

15 optimum time of the process and its quality. This in turn entails analysing pressure, temperature and the steam flood within the area of oil produced in order to reach the optimal thermal level and to get the economic benefit from the recovery and production process. Improved productivity is the ultimate aim of the process. What are the main objectives of the project? We can summarize the main objectives of the experimental project of steam stimulation as follows: To access essential data and information for Full Field Implementation. To carry out the necessary modifications on the project to achieve the target within the time necessary to create maximum the thermal impact on heavy oil in terms of effectiveness. To accomplish or even exceed the planned-for targets concerning production from all target layers. To formulate integrated knowledge and understanding of the technical challenges that will show up during the process of steam stimulation in a carbonate reservoir. To reduce risks and provide health guidelines to be taken into consideration during the technical phase of the full application. What is the overall project duration, the expected date of completion, and the estimated cost of Large Scale Project (LSP)? The overall project has been planned to reach the application stage on the whole field in about 10 years. According to the current plan, the first steam injection in the reservoir will took place by end of 2008 and will continue along with data assortment, and close analysis of the impact on the reservoir and the productivity of wells so as to maximally upgrade its efficiency for three years to come, before entering the final phase of the project. The final phase which will take about 7 years-, will see the application of the technique and the careful scrutiny of results on the whole field. Afterwards, production will continue to the optimum level. The cost of this project is 95 million KWD ($329 million), to be financed equally by the KGOC and Chevron, Saudi Arabia. What are the expected financial returns after the completion of the project of steam stimulation? Any pilot project of a new technique will not achieve the desired commercial returns unless it is applied on a large scale. Similarly, here, the profits will not be tangible till the application covers the entire field. It will also mean that production of heavy oil will need to increase from 10% to 50% and that, the process of production from the reservoir will have to be prolonged. However, this will require huge investments in excess of $10 billion. Issue No October

16 Nouri Ben Salama: The Balanced Scorecard is the modern way of measuring and evaluating performance 16 Issue No October 2007

17 In 2006 KPC adopted a new system to manage the performance of its subsidiaries and main sectors. The new system has already been put into action. To shed more light on the Performance Management System KPC World Magazine met Nouri Ben Salama, Manager Performance Follow-up Management. At the outset, he said that KPC has always striven to upgrade and improve its and its Subsidiaries level of performance. It is with this goal in mind that the Performance Management System was introduced. The system translates the vision and strategy of KPC into action by turning its aims into performance indicators that can be measured and assessed quarterly to determine the extent to which the higher strategic objective of KPC is being fulfilled. It has been introduced by a consultancy authority whose task it was to coordinate the relationship between KPC and its subsidiaries. The study it undertook identified the need to change the present administrative model, adopt the model of strategic management and redesign the main administrative processes of KPC and its subsidiaries to comply with new models, including the performance management system. We extensively reviewed KPC message Would you like to shed light on the performance management system? The project aims to develop a system of high efficiency and effectiveness to measure and followup the performance of KPC and its subsidiaries while implementing the strategic targets using the method of the Balanced Scorecard, taking into account the strategic management model of KPC. The scope of the project included: Identification of the key performance standards associated with KPC s strategic targets. Development of methods of work necessary for the performance management system, such as: Set goals Review performance on a quarterly basis Associate the performance management system with the system incentives for KPC and its subsidiaries managers. What are the key stages of the project? Before talking about the project s stages, I would like to summarize the goals set by KPC prior to the commencement of the implementation process. These provided the basis on which KPC s message and strategic orientations have been built. KPC s message and strategies were thoroughly perused to identify the key elements of the performance management system. These were to: Maximize the return to shareholders The balanced scorecard translates KPC s message, vision and strategy into action Issue No October

18 Ensure optimum exploitation of hydrocarbon resources Develop the local economy Develop and promote national employment Effectively manage issues related to health, safety and environment Manage KPC activities efficiently and effectively Thus, relying on the methodology of Balanced Scorecard system and the specific requirements of KPC, standards have been identified that cover all the major themes enlisted in KPC s message and strategies, such as the: Financial perspective Perspective of shareholders and customers Perspective of administrative processes Perspective of innovation and learning Assessing the level of performance of KPC s subsidiaries and its main sectors is conducted quarterly (every 3 months) via the balanced scorecard Perspective of national targets. In light of those perspectives and KPC s strategic guidelines, 44 indicators have been identified via meetings and several workshops with all KPC subsidiary companies and sectors. Following these, the mechanism of the performance management system was laid in sections follows: First: The translation of strategic directions into: A set of performance measurement indicators. Major capital projects. Strategic programmes. Second: Set annual goals for indicators, projects and programmes The process of performance management is one of the key components of KPC planning enterprise 18 Issue No October 2007

19 at the beginning of each fiscal year. Targets were related to the incentives system of Oil Sector s leaders, targets that were measurable, agreed upon, logical, feasible and of specified deadlines. Third: Monitor the key indicators such as the progression of work, and projects and programmes on a quarterly basis. These were then compared to the set targets. Fourth: Establish a quarterly review of the results with the Chief Executive Officer and Managing Directors to identify deficiencies, and objectives that require more effort to be accomplished. Fifth: Estimate the Oil Sector s leaders incentives depending on the annual results of their actual performance. During our dialogue, you mentioned the quarterly reports on the performance management system, what are their results? Reports results reflect the performance indicator targets which have and have not yet been achieved, and help identify the constraints and solutions that must be followed to accomplish the goal. The quarterly report also includes a summary on the work progress of some major capital projects and strategic programmes, as well as some key information such as crude oil prices, production rates, the overall manpower and its proportion of Kuwaiti workers. After that, results are reviewed by CEO and Managing CEO will hold meetings every six months with all the Managing Directors and their deputies to review performance and overcome obstacles CEO meets KPC Managing Directors on a quarterly basis Directors. Upon estimating what has been accomplished since the commencement of the performance management system in 2006/2007, we found that many of the goals have been achieved. During the next three years, by the Will of God, we expect the performance management system to achieve all the desired results. Are there obstacles facing the performance management system? If any are they due to lack of understanding or preparation? The performance management system is already applied in many companies, most of which adopt the approach of setting indicators and objectives. Here I would like to refer to the CEO s -Saad Al- Shuwaib - keenness to overcome all obstacles that may hinder the performance management system from achieving its objectives. To help achieve this, the CEO will hold meetings with all Managing Directors and their deputies every six months to supplement those held on a quarterly basis. These meetings will further facilitate the exchange of ideas and discussion of the corrective steps and aspects that require further close attention. What are the advantages for the staff of the Oil Sector when the performance management system is fully applied? The system is very beneficial because the follow-up system performance is a genuine and simplified translation of KPC s message and strategic directions. By applying the system, KPC set specific goals and a plan of action where all that is measured can continuously be managed and developed. This helps ensure the accomplishment of the desired goals of KPC s message. What are the current and future projects or activities of the performance follow-up management? By October 2008, the performance system will be automated in collaboration with the Information and Computer Systems Department, and Studies and Human Resources Department. Such a system will allow users to input and output information, and give them access to the results, reports and statistics which help them to verify improvement and progress. The automatic follow-up performance system is a significant step towards the advancement and modernization of management. Actually, it is a supportive administrative tool which will help the company to benefit from performance evaluation results and to deduce recommendations. Management will also issue a manual on KPC and its subsidiaries performance measurement for the Managing Directors. It will contain a summary of the performance indicators for the year 2007/08, the assigned targets and a brief definition of each of these indicators. To further highlight the role of the performance follow up Department, we will launch a website containing information on the whole initiative and its advantages and benefits, in addition to steps of building the scorecard and using it as a tool to measure performance and to store some useful references and international training courses on it. A final word I sincerely hope that we will all do our best to ensure the success of this work, which emerged from our conviction that the achievement of all KPC strategic directions can be fulfilled when we enhance dedication, devotion, and team spirit. Issue No October