KPC Local Content:

Industrial Opportunities for Private Sector

Kuwait Investment Forum / 20-21 March 2018

KPC’s 2040 Strategic Directions

2

KPC’s Mission:

We optimize the value of Kuwait’s hydrocarbon

resources by operating commercially and globally in an

integrated and sustainable manner, while providing

opportunities for our people to grow and contributing to

Kuwait’s economic development

KPC’s 2040 Strategic Directions

3

Domestic Upstream (including Partitioned Zone)

• Achieve sustainable crude oil production capacity of 4.75 MM

bpd in 2040.

• Achieve sustainable non-associated natural gas production of

2.5 bcf/d in 2040.

Domestic Downstream

• Grow domestic refining capacity to 2.0 MMBPD by 2035 with

complex configurations, maximum offtake of domestic heavy

oil production and taking into consideration meeting local

energy demand.

• Integrate refining and petrochemical operations domestically.

Petrochemicals

• Grow the core petrochemical business inside and outside of

Kuwait.

• Expand into Downstream derivative and specialty chemicals.

Shipping

• Ensure the size and configuration of the fleet to meet long

term strategic cover and KPC marketing requirements.

114

71

89

107

127508

0

100

200

300

400

500

600

2018/19 -2022/23

2032-2025 2026-2030 2031-2035 2036-2040 Total

KPC’s Consolidated Capital Expenditure

4

KPC Projected Capital Requirements

Nominal USD bn.

KPC is expected to spend $114bn in CAPEX over the next five years and an additional $394bn beyond that to 2040

KPC is projected to

spend 76% of its total

required CAPEX on

Domestic Upstream

projects

76%

6%

9%

4%5% 1%

Domestic US International USDomestic DS International DSPetrochemical Midstream

KPC Developed its Local Content Strategic Directions in line with the government plans

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Leverage refining and petrochemical businesses to deliver downstream manufacturing opportunities to the private sector, not less than 10 opportunities by 2025

Increase local private sector share in KPC spending and achieve a minimum of 30% for local suppliers and contractors contributions in capital projects spending by 2017

Enhance private sector participation in KPC through existing and future activities/investments:

– At least 4 opportunities by 2020– At least 5 additional opportunities by 2025

2040 LC Strategic Directions

KPC 2040 Local

Content Strategy

1

2

3

Local Content Strategic Objectives

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Increase effective participation of capable Kuwaitis in G&S supplier workforce

Maximize the competitive and sustainable LC development in the procurement of G&S

Expand the sustainable development of linked downstream industries

Increase participation of the private sector along the oil sector value chain

Engage with different stakeholders and advocate for enabling government policies and legislations

Strengthen internal capabilities, processes and systems

Kuwaitization of the workforce

Localization of procurement of goods and services

Development of linked downstream industries

Increase of Private sector participation

Stakeholder engagement & advocacy with the gov.

Enabling the operating model

Core Enablers

KPC Past Efforts in Private Sector Participation

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First Batch of fuel

stations

Second Batch of

fuel stations

Al Qurain petrochemical

company **

KNPC Lube Oil Blending

plant

Boubyan Petrochemical

company *

Calciner Project

PIC Salt and Chlorine plant

1995

2000

2004

2007

2005

* Participation in Equate (9%), TKOC (9%)** participation in Equate (6%) , TKOC (6%), TKAC (20%), TKSC (11.5% (TKAC owns 57.5% of TKSC))

KPC & Subsidiaries’ Local Spending

8

394.537

918.208979.123

997.325

1,398.06

1,287.75

0

200

400

600

800

1000

1200

1400

1600

Q4 11/12 Q4 12/13 Q4 13/14 Q4 14/15 Q4 15/16 Q4 16/17

(million KD)

KPC and the Private Sector Participation

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In view of KPC’s 2040 strategy, KPC has embarked onto a thorough Private Sector

Participation Strategy consisting of various 2040 Strategic Initiatives catering for local

content development, Kuwaitization enhancement and industrialization.

• Green Carbon• Bio-Diesel• MTBE from Methanol Plant• Packaging Plant• Bagging Plant• Maintenance Outsourcing• FCC Distillate into Aromatics Production• Kerosene into Linear Alkyl Benzene Production• Carbon Black from HCO• Expandable Polystyrene (EPS)• Polypropylene (PP) Film and sheet (Nonwovens)• Local Development of the OCTG Value Chain• Facilitate Cooperation between Local Well Ops.

Service Providers and Int’l Tech. Providers• Local Valves Assembly• Localize Manufacturing of Complex Valves• Localization of specialized non-critical maintenance

jobs

• Petroleum Industrial Park (PIP)

• Further Future Industrial Opportunities

• Polypropylene Film and Sheet (BOPP)• Linear Low Density Polyethylene LLDPE• Polypropylene (PP) Raffia• Spent Catalyst into Metal Recovery• Development of Chemicals Blending

Capabilities• Pipeline & Flowline Industry Value Chain• Common Chemical and Lube Oil Services• Pallet Production Plant• Carbon Dioxide• 43 Fuel Station, with SMEs coordination• O&M Opportunities in ZOR Refinery (Waste

Water Treatment Plant / Sulfur Handling Unit / Tankage / Marine Facilities)

• BoubyanPetrochemical company

• PIC Salt & Chlorine plant

• KNPC Lube Oil Blending plant

• Calciner Project• First Batch of Fuel

stations• Second Batch of Fuel

stations • Al-Qurain

Petrochemical company

Define Assess Under Implementation

Operate

Local Content Opportunities Offered already by KPC to Local Private Sector

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# Opportunity Name Short DescriptionAnnouncement

DateStatus

1 Carbon DioxideDeliver CO2 generated by KNPC Refineries to Enhanced Oil Recovery (EOR) program in KOC.

Mar 2017Preparing Feasibility

Study

2Polypropylene Film and Sheet (BOPP)

Build a Polypropylene (PP) Nonwovens Plant for health, hygiene and disposable products.

27 Nov 2017Evaluating

EOIs

3Polypropylene (PP)

Raffia

Build a Polypropylene (PP) Raffia Plant to produce Raffia bags used for construction and fertilizer bagging.

27 Nov 2017Evaluating

EOIs

4Spent Catalyst into

Metal RecoveryConstruct a plant to recover metals from spent hydroprocessing catalysts.

27 Nov 2017Evaluating

EOIs

5Linear Low-Density

Polyethylene (LLDPE)Build an LLDPE Film/Sheet Plant used for producing High clarity packaging.

28 Jan 2017Receiving

EOIs

6Biodiesel Business

Opportunity

Procure Bio Diesel from private companies who will set up Biodiesel Plant using Used Cooking Oil (UCO) and blend in Local Market Gasoil.

Mar 2017Evaluating Proposals

7CO2 Sale to Green Carbon Company

Recover and sell CO2 emitted to atmosphere from refineries, to external parties as part of Green Initiative and Private Sector promotion.

31 May 2016Agreement

under Finalization

Local Content G&S Opportunities that will be offered Today to the Local Private Sector

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Development of Chemicals Blending Capabilities Opportunity

Pipeline & Flowline Industry Value Chain Opportunity

Common Chemical and Lube Oil Services Opportunity

Pallet Production Plant Opportunity

Set up chemicals blending facilities locally to generate chemical products to be used in oil sector

operations and activities.

Set up production facilities in cooperation with international manufacturers for localizing value adding operations such as repair, coating and

threading services for pipeline products.

Chemicals and lube oil are an integrated part of petrochemical plant operations. The opportunity is to supply required common chemicals / lube oil for

the petrochemical plant operations; including storage, loading, and safe disposal of spent

products.

Petrochemical Solid Products are usually sold in packages whereby significant amounts of pallets

are required to move packages easily. The opportunity is to allow the private sector to

construct a pallet production plant to serve this purpose.

Thank You