Kuwait National Petroleum Services Company (NAPESCO), Kuwait Oil
Interview with Khalid Hamdan Al-Saif. For Kuwait to make decisions like other nations who have decided to diversify their income away from oil, Kuwait will need concrete steps in order to preserve this way of life for our children and their children. The role of Kuwait oil in Kuwait economy is very strong and, I personally feel more should be done in Kuwait to diversify the income away from oil in order to secure better future for Kuwait.
While it is hard not to overstate the importance of oil to the Kuwaiti economy (which accounts for 90% of the total revenue) the state is attempting a diversification strategy to expand key of non-oil sectors (banking, industry, telecommunications, etc). How do you see the role of oil in the Kuwaiti economy and is the dependence on oil a concern to you?
What is your opinion on this statement “less consumption and greener energy”?
Kuwait Oil, Kuwait National Petroleum Services Company (NAPESCO), Managing Director, Khalid Hamdan Al-Saif: I think there is always this misconception that global warning is the same as pollution. In my mind they are two different things. Pollution is a real problem and you can go to cities like Mumbai and Tehran and literally people may feel sick the moment they step into the city-pollution is man made. However, global warming is still being debated and many people feel that the impact of man on global warming is highly overrated. Scientists have proved that the biggest CO2 emitting source in the world is the sea; that is not man made or something we can control. I am definitely for steps to utilize greener energy and using sustainable solutions. Basically, for the pollution part we want to preserve the life on the planet and the condition of the environment for future generations. Utilizing sustainable energy is thus the way to go in order to do this.
Kuwait has embarked on a significant expansion plan aiming at increasing capacity of oil production, meanwhile Iraq’s oil ministry awarded seven oil fields to global oil majors, bringing its potential oil capacity in six or seven years to 12 million barrels per day. How will NAPESCO participate in these developments?
Kuwait Oil, Kuwait National Petroleum Services Company (NAPESCO), Managing Director, Khalid Hamdan Al-Saif: NAPESCO is diversifying our offerings in terms of services in order to align with our major client oil companies. For example, Kuwait Oil Company will pursue gas development and heavy oil production in the upcoming year between 2010-2020. NAPESCO is changing the way we do business in order to accommodate these strategic decisions our major clients have undertakes. With respect to Iraq we are in contact with the international companies that won the contracts because NAPESCO feels Kuwait is the best springboard for such things- NAPESCO’s services and others included. We are efficient and cost-effective and since NAPESCO has been operating in Kuwait and competing with other international companies, we feel that we have enough credit and experience to serve them very well.
According to Bloomberg, your profit declined in 2008. How do you assess NAPESCO’s financial performance for 2009 and how confident are you that you will deliver a better performance in 2010?
Kuwait Oil, Kuwait National Petroleum Services Company (NAPESCO), Managing Director, Khalid Hamdan Al-Saif: 2009 has been a very good year so far. NAPESCO is confident that we will surpass our 2008 performance. 2008 was regrettably a year where many people suffered and so did we with regard to our portfolio and market share. For 2010 our clients are increasing their activities and we are increasing NAPESCO’s capabilities with manpower and client services. With that, we are also confident that NAPESCO will deliver an even better performance for 2010.
How challenging is it to stay competitive and what is your major concern?
Kuwait Oil, Kuwait National Petroleum Services Company (NAPESCO), Managing Director, Khalid Hamdan Al-Saif: Its always a challenge to remain competitive whether its the cost side or with regard to innovation- innovation is extremely important in our industry. The major concern, of course, is to come up with new ways and means and technologies to serve our clients. That for us being a local company is a major concern and we are trying our best to gain alliances with reputable companies who can provide technologies that will benefit NAPESCO in order to modify our service offerings so we can remain competitive for the upcoming years.
How would you describe NAPESCO’s strategy?
Kuwait Oil, Kuwait National Petroleum Services Company (NAPESCO), Managing Director, Khalid Hamdan Al-Saif: Our strategy is simple at the moment because we have been confined to the borders of Kuwait. Our strategy is to diversify our service offerings within the state of Kuwait and the second angle of our strategy is to serve the other oil companies in the region like ARAMCO, BAPCO etc. The third element of our strategy is for NAPESCO to expand upon our environmental services because it links to sustainable development. We believe the need for environmental services will be growing very rapidly in both Kuwait and the surrounding region.
What are your expansion plans and strategic goals for 2010?
Kuwait Oil, Kuwait National Petroleum Services Company (NAPESCO), Managing Director, Khalid Hamdan Al-Saif: Our strategic goal for 2010 is to start working in Oman. We have already placed a bid for a huge center in Oman and we feel that we’ve placed a very competitive bid so our major strategic goal for 2010 will be the project in Oman. Also, Kuwait Oil Company is increasing their rigs by almost a factor of 50% for 2020. That is huge because we want to capture around 25% of that market share.
Kuwait Oil, Kuwait National Petroleum Services Company (NAPESCO), Managing Director, Khalid Hamdan Al-Saif: Basically NAPESCO tries our best to be a good citizen, if you will. In this region, our number one concern is not to pollute or emit any pollutants into the environment. We wish to below the Kuwaiti EPA standards with respect to pollutants and even fluid dispersal and so force. Our main goal is to serve the community that we are in at the moment.
NAPESCO was established in 1993 to provide a broad range of services to the Middle East oil and gas industry. Kuwait Oil Company is your main client so how would you describe your present client base and what are your plans for diversification?
Kuwait Oil, Kuwait National Petroleum Services Company (NAPESCO), Managing Director, Khalid Hamdan Al-Saif: Having two main clients generate around 85% of our revenue is similar to Kuwait generating 90% of its revenue from oil. It is not a comfortable place to be in. Basically, NAPESCO’s strategy is to diversify service offerings and offerings that we do not currently offer to support drilling and production of oil. The second element is to diversify our services outside of Kuwait in places such as Saudi Arabia and Iraq, for example. We believe that the environmental standards will become stricter than they are now and the Kuwaiti EPA will play a significant role in regulating industries and service providers. NAPESCO, therefore, believes in expanding our environmental services in terms of both offerings and capabilities to serve Kuwait better and give back to the country.
NAPESCO deals with industrial and environmental products and services but many people believe that in fifty years there will be no oil. How do you see NAPESCO’s future and Kuwait’s future?
Kuwait Oil, Kuwait National Petroleum Services Company (NAPESCO), Managing Director, Khalid Hamdan Al-Saif: Kuwait’s future will not be bright if Kuwait remains on the same course it has been on the past few years. We do not see any major efforts to take steps to diversify away from oil like other countries have. Other countries have put realistic targets on revenue to be generated from oil and from other industries for the next 20-30 years but Kuwait has yet to do that. I believe Kuwait has the potential to become one of the leading countries in the region with respect to services and manufacturing and has the potential to become a hub for the region. We have very promising countries that we can link together here like Iraq and Saudi Arabia and even other countries if politics are able to align. I believe that if all the political issues in the region as resolved in the region that Kuwait can play a major role with respect to bringing those countries together with respect to logistics and services. NAPESCO needs to be dynamic and proactive when it comes to the services we provide and being a service provider our core business will remain the same. We are striving to implement value-added services in terms of services to support production and the drilling of oil in Kuwait. Hopefully, we will be able to export these services to other countries in the region who need it as well.
To finalize the interview, do you have a final message about Kuwait you would like to address to our international viewers and readers?
Kuwait Oil, Kuwait National Petroleum Services Company (NAPESCO), Managing Director, Khalid Hamdan Al-Saif: Kuwait is a small country but I believe Kuwait can play a huge role in the regional and international arena in terms of economics and services. I hope that the leadership of the country will take concrete steps in order to diversify our income from oil and hopefully we will see a very different Kuwait in the next 10-15 years than the Kuwait that we know right now so Kuwait can remain vibrant and a better place for our children.