Kuwait Seeks Oil Assets to Expand Abroad After Industry Shakeup
Kuwait Foreign Petroleum Exploration Co. is seeking acquisitions including in Southeast Asia to meet output targets, according to its chief executive officer, who the country installed as part of a shakeup of the oil industry.
“The way to do this is through acquisitions, and acquisitions that are not piecemeal but that are strategic in nature,” Kufpec CEO Sheikh Nawaf Saud Al-Sabah said in an interview in Kuwait City. “We are now looking very seriously.”
Sheikh Nawaf was appointed in May, along with new chiefs for Kuwait Oil Co., Petrochemical Industries Co. and Kuwait National Petroleum Co., after Dow Chemical Co. won $2.19 billion from Kuwait to compensate for a canceled joint venture. Kufpec, a unit of state Kuwait Petroleum Corp., plans output of 200,000 barrels of oil equivalent a day by 2020, from almost 80,000 now.
The current output is “not a level that we like,” Sheikh Nawaf said yesterday. With gas making up 80 percent of output, “the challenge is to try to get more oil as well,” he said.
The company also seeks to increase reserves to 650 million barrels by 2020 from just under 400 million barrels currently.
It’s studying North American and shale opportunities, even after missing “the initial wave of investments” in resources exploited using hydraulic fracturing, Sheikh Nawaf said.
Kufpec operates in Asia, Africa, Australia and the Middle East, which makes up about half of its production. It has two exploration licenses in Pakistan and Australia and recently won a license in Yemen. Kufpec, which last year bought a Norwegian company, agreed on a $750 million bank loan to fund expansion.
Kuwait Petroleum in March injected 1 billion dinars ($3.5 billion) of capital into Kufpec to fund growth. Some acquisition opportunities involve projects where the current operators need an investor to bring in additional capital and others involve international companies shifting strategy, Sheikh Nawaf said.
Kufpec is seeking exploration licenses that allow it to operate discoveries and plans to run 20 percent of its own production capacity by 2020, according to the CEO.
Kufpec is a key business for Kuwait Petroleum and no longer a candidate for privatization, with profit expected to rise this year from about $200 million in the previous period, he said.
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