Kamil Al-Herami, former CEO of Kuwait Petroleum Company (KPI), has raised the need to end government monopoly in the hydrocarbon sector and allow private investment in the downstream industry. He stressed that this action is essential under current conditions to utilize the additional resources of this sector and develop the more profitable refining and petrochemical industry.
High Prices of Petrochemical Products
Al-Herami noted that refined and petrochemical products are currently being sold at some of their highest prices, with some products selling for over $40 above the price of crude oil. Despite crude oil prices exceeding $100, the prices of some petrochemical products like gasoline and naphtha have reached $170 per barrel.
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Focus on Developing the Downstream Industry
The former KPI CEO added that Kuwait should focus on developing the downstream industry and should not increase crude oil production capacity beyond 3 million barrels per day. He clarified that now is the right time for Kuwait to develop its national resources with the help of the private sector.
Kuwait, with a refining capacity of 1.45 million barrels per day, has the second-largest oil refining capacity in the Arab world after Saudi Arabia, accounting for nearly 13% of total Arab refining production. The country is also planning to build a $10 billion petrochemical complex next to the $16 billion Al-Zour refinery, which will have a production capacity of nearly 2.7 million tons per year of aromatics and polypropylene and 1.7 million tons of gasoline.
Ali Al-Anzi, director of the Al-Munakh Economic Center in Kuwait, emphasized that accelerating the petrochemical complex project is an important strategic step that represents a clear path towards maximizing the added value of Kuwait's oil sector and shifting focus from exporting raw materials to expanding more profitable and sustainable downstream industries.
Al-Herami also pointed out whether it is not time for some oil sectors to be privatized to reduce the ongoing budget deficit and to leverage Kuwaiti expertise and capabilities? He added that even if the government sells part of its shares, this action could allow the private sector to maintain its investment in these sectors and utilize it instead of investing abroad.
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