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Oil workers to strike over payroll dispute – Kuwait targets oil output of 4 million bpd

KUWAIT: (From left) Andrew Brown, Upstream Director of Shell; Jason Bordoff, Professor of professional practice in international and public affairs and Founding Director of the Centre on Global Energy Policy at Columbia University; and Jamal Jaafar, CEO of Kuwait Oil Company, attend the fourth Kuwait oil and gas conference yesterday. — Photo by Yasser Al-Zayyat
KUWAIT: (From left) Andrew Brown, Upstream Director of Shell; Jason Bordoff, Professor of professional practice in international and public affairs and Founding Director of the Centre on Global Energy Policy at Columbia University; and Jamal Jaafar, CEO of Kuwait Oil Company, attend the fourth Kuwait oil and gas conference yesterday. — Photo by Yasser Al-Zayyat

KUWAIT: Kuwait’s oil union decided yesterday to begin a “total strike” next week following a dispute with the oil ministry over a new payroll rejected by workers. The decision was taken at an emergency general assembly meeting of the union a day after talks with acting oil minister Anas Al-Saleh broke down without agreement. The union said the strike will start on Sunday, April 17, at all production units in the country.

Discontent among oil workers started after Kuwait, like other oil producers, began taking measures to cut spending in the face of the sharp decline in global crude prices. The government is introducing a new payroll scheme for all public employees and wants to include the 20,000 oil workers, which would mean an automatic cut in wages and incentives. Head of the union Saif Al-Qahtani said that workers presented a number of alternatives during Sunday’s meeting with the minister but they were rejected. The union is also protesting plans to privatize part of the oil sector. The wages oil workers receive are significantly higher than other public employees.

Production and exports would not be affected by the strike, a spokesman for Kuwait’s national oil company Kuwait Petroleum Corp (KNPC), one of five state-owned companies that will be affected by the strike, said. “If the strike happens we do have a strategy in place to deal with this kind of action where extra staff will be used to run operations” Khaled Al-Asousi, KNPC’s Deputy CEO for Support Services said, adding that some oil facilities might be shut down temporarily. The other companies where workers plan to join the strike are Kuwait Oil Company, Kuwait Oil Tanker Company, Equate Petrochemical Industries Company and Kuwait Gulf Oil Company.

According to Kuwait Petroleum Corporation (KPC), the oil production rate of Kuwait is currently around three million barrels per day, with the aim of reaching four million barrels per day by 2020. KPC is planning to expand its performance in the petrochemical field and develop Jurassic gas to further contribute to Kuwait’s economy, said KPC’s CEO Nizar Al-Adsani at fourth Kuwait oil and gas conference yesterday.

Since June 2014, a drop in oil prices has been posing a challenge to oil industries, including an overflow of oil supply in international markets and low production, said Adsani. He noted that KPC is exerting efforts to achieve sustainability through over 100 initiatives to develop the company and its subsidiaries.

The initiatives focus on reducing costs, boosting performance, investments in big projects and developing the petrochemical industries’ sector, he added. In the same context, Adsani mentioned that Kuwait Petrochemical Industries Company has signed an agreement to acquire 25 percent of South Korea’s SK Gas Company. The agreement will boost the Kuwaiti oil sector and investments in East Asia, the CEO noted.

Meanwhile, Deputy CEO for Support Services at KNPC Khaled Al-Asousi said that the oil refining rate at Kuwait’s three refineries is recorded between 920,000 to 930,000 barrel per day. KNPC’s oil refining power has dropped by about 50,000 barrels due to the fire that broke out at the seventh unit in Shuaiba refinery a while back, Asousi said on the sidelines of the conference. He added that the refinery’s performance is back to normal now, noting that other factors such as maintenance can also cause a drop in rates.

As for the company’s clean fuel project, Asousi said that KNPC will provide 30 percent of the project’s financial value, while the remaining 70 percent will be financed by local and international banks. Also, he said that KNPC has completed 16 percent of the Zour refinery project. On KNPC’s readiness level to implement a potential decision to increase petrol prices, Asousi said that the company’s systems are prepared to alter the prices as soon as it receives orders from the finance ministry.

Also, Kuwait Oil Co will soon offer contracts for offshore rigs and support services to drill its first undersea wells as the state tries to boost crude output to the highest level in more than four decades, reported Bloomberg. “We are trying to make use of the low cost of production in Kuwait,” Chief Executive Officer Jamal Jaafar said at the conference, whose company is the exploration and production arm of KPC.

KOC is looking at six offshore areas to drill its first undersea wells and plans soon to offer contracts for the work, he said, without specifying dates. Kuwait, OPEC’s fourth-largest member, hasn’t pumped an annual average of more than 3 million barrels a day since 1973, data compiled by Bloomberg show. Kuwait will also start a project this year with Royal Dutch Shell Plc to capture carbon dioxide at oil fields and reinject it underground to produce more crude, he said. KOC is tackling more difficult crude formations to increase production capacity, and it’s testing the injection of chemicals and polymers at fields in the northern part of the country to enhance recovery. – Agencies

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