Career Succession is one of the Premier Projects …Quarterly Magazine, Issue No. 42, October 2007...

Quarterly Magazine, Issue No. 42, October 2007

Career Succession is one of the Premier Projects Currently Applied throughout the Oil Sector

The Steam Stimulation Project Implemented By KGOC…The Biggest of its Kind Worldwide

Raising Production to 100 thousand barrels per day, Upgrading the Reserves are KUFPEC’s Targets

MAB Surpasses all the Oil Sector’s Companies and Institutions in Kuwait

Social Responsibility Programmes are of Equate’s Priorities

6Aiming to Achieve 2010 Strategy Raising production to 100 thousand barrels per day is a strategic target to KUFPEC

16 The Balanced Scorecard: the modern way of measuring and evaluating performance

20MAB Excels in Quality, Safety & Risk Management Throughout the Oil Sector

12KGOC Launches Largest Project of Steam Stimulation World Wide

In This Issue

KPC’s Mission

Kuwait Petroleum Corporation (KPC), fully owned by the State, is one of the world’s major oil and gas companies. It is focused on petroleum exploration and production, refining, marketing, petrochemical production and sales, and transport. KPC’s mission is to manage and operate these integrated activities worldwide in an efficient and professional manner. In addition, KPC is committed to growing shareholder value, whilst ensuring the optimum exploitation of Kuwait’s hydrocarbon resources. KPC has an important role in contributing to the development of the Kuwaiti economy, developing national manpower, maintaining superior commercial and technical expertise, and pro actively managing the environmental, health, and safety aspects of KPC’s businesses.

Quarterly MagazineIssue No. 42, October 2007

Quarterly Magazine, Issue No. 42, October 2007

Career Succession is one of the Premier Projects Currently Applied throughout the Oil Sector

The Steam Stimulation Project Implemented By KGOC…The Biggest of its Kind Worldwide

Raising Production to 100 thousand barrels per day, Upgrading the Reserves are KUFPEC’s Targets

MAB Surpasses all the Oil Sector’s Companies and Institutions in Kuwait

Social Responsibility Programmes are of Equate’s Priorities

Editor in Chief

The KPC World team would like to extend thanks and appreciation to all those who contributed editorial material, information and photos for this edition of the magazine.

CorrespondenceP.O. Box : 2656513126 Safat, KuwaitFax: (965) 4994991Website: www.kpc.com.kwEmail: [email protected]

30 Social Responsibility Programmes is Equate’s priority

34 The Clean Fuel Project, a New Strategic Leap in KNPC

38Negligence, Failure to Follow Safety Guidelines Are Reasons for Parking Lots’ Fires

26Application of the Succession Plan Throughout the Oil Sector

Nasser Bader Al-MudhafDeputy Managing Director Government, Parliamentary & Media Relations

Editorial Team

Media Relations Dept.

Design, Layout & Printed by:Al-Assriya Printing Press Publishing & Dist. Co. w.l.l.

KPC, Strategic Targets

At the beginning I would like to congratulate you on the occasion of Eid Fitr praying to Allah the Almighty to bless and cherish you. I would also like to congratulate all the employees in the Oil Sector on the generous initiative of the Supreme Petroleum Council and its approval of the recommendations related to structural salary changes for the Kuwait Petroleum Corporation (KPC) staff and its subsidiaries. These include an increase of between 10 and 25% for those on basic salaries. The Council has also decided to initiate a premium salary for the specialist positions that were identified via a survey of the local market and Gulf. All of these measures are designed to enhance KPC’s reputation and to ensure its competitiveness with International companies. It is an integral part of KPC’s drive to strengthen its global position, KPC.

Another part of this drive was last year’s introduction of the performance management system. This system guarantees autonomy for subsidiaries in regard to decision-making that affects capital projects, and helps ensure that they meet the objectives of KPC’s general strategy.

This issue contains a variety of exclusive topics, interviews, investigations and studies. Of particular significance, however, are the report on quality and safety in Mina Abdullah refinery, an interview with Abdul Hadi Al-Awad Managing Director KGOC about the company’s new projects, and another interview with Bader Al-Khashti Managing Director KUFPEC, on the recent achievements of the company.

Editorial

Nasser Bader Al-MudhafDeputy Managing Director Government,

Parliamentary & Media Relations,Editor-in-Chief

To Express Appreciation

A Reception for KPC Customers in Singapore

The KPC delegation headed by Jamal Al-Nouri, Managing Director International Marketing, included: Mohammad Al-Shatti Manager Central Derivatives Sales & National accounts Management, Kahtan Al-Abdulkarim Regional Manager KPC Regional Office, Far East, Walid Al-Abduljalil Sales Coordinator Central Derivative Sales and National Accounts Management, Mohammad Al-Qallaf Sales Coordinator Fuel Oil, Coal Oil, and Sulphur Sales Management, Haitham Al-San’ea Sales Coordinator Naphtha Gas and Gasoline Sales Management, Abdul-Aziz Al-Dawsari Sales Coordinator Crude Oil Sales Management, Dakhil Al-Ruhaif Central Derivatives Sales & National Accounts Management,Mohammad Ameen Marine Administration, Youness Askenani Supply Operations Management, Masouda KPC Regional Office, Far East, Tokyo.

The ceremony was attended by the Honorary Head of the Arab Diplomatic Service, Arab Ambassadors, and Senior Officials in Singapore, along with members of the Singaporean Government and Parliament, as well as a number of managers and staff members from governmental institutions and international oil companies. A great number of KPC customers were also invited to attend the event as an expression of gratitude for their

Following its annual custom, Kuwait Petroleum Corpora--tion (KPC), International Marketing Sector, held a reception for its custom--ers in Singapore-Capital, on Wednesday 12 September 2007.

immediate and long-term support of KPC as a supplier of oil and its derivatives. The reception coincided

with the Asia-Pacific Petroleum Conference (APPEC) held in Singapore.

Issue No. 42 - October 2007 5

The unique position of the Kuwait Foreign Petroleum Explorations Company (KUFPEC) is boosted daily and is gaining a worldwide reputation because of its high technical potential which continues to be developed. Its experience in the field of oil exploration spans 26 years during which time it has been influential in the arena of global competition; it extended its influence and access to sectors and concessions of 15 countries by the beginning of 2007. Regarding the success stories of KUFPEC and the signing of a series of contracts for exploration, KPC World magazine has recently met Bader Al-Khashti, Chairman of the Board of Directors Managing Director KUFPEC.

Aiming to Achieve 2010 Strategy

Bader Al-Khashti: Our goal is to produce 100 thousand barrels/day, to increase the reserve to 410 million barrels of oil

Issue No. 42 - October 20076

KUFPEC has recently signed a number of contracts; one is for oil exploration in the Gulf of Suez with investments of more than $ 400 million with the Arab Republic of Egypt. Are you able to provide a little more information on this exciting new prospect? This contract is related to Jisom field South of the Gulf of Suez, which covers some 105 square kilometres. In this project, KUFPEC cooperated with the Egyptian company PICO Petroleum, a major company in the Oil Sector. The project invited

strong competition from many companies, as

this is the first time that the Egyptian General Petroleum Corporation (EGPC) has privatized a productive field. Fortunately we were

able to secure this field, which was discovered in 1982. Its maximum production is 20 thousand barrels

Bader Al-Khashti

With twenty six years experience and state of the

art expertise, it is no surprise that KPC is a highly

reputable company within the Oil

Sector

We recently reached feasible

solutions in Sudan; explorative

operations will shortly begin


The African continent, is now the focus of many global companies

per day and it currently produces about eight thousand barrels a day. We intend to develop it in the near future to restore its previous production and consequently to get the desired returns.

Why did KUFPEC prefer to work in a productive field and not in new exploration concessions? This matter is governed by the strategic policy of the company which plans to reach a production of 100 thousand barrels a day by 2010, in addition to increasing the stock or company’s reserves to 410 million barrels of oil. Our entry in this field was aimed at increasing production and reserves, as it is expected to increase Jisom production after it is technically developed.

KUFPEC has stopped using the concession, which it obtained in southern Sudan, because of the political disputes there. What is the economic impact of this on the company?Investments in general, and those in oil in particular, are sometimes exposed to risks, and this may occur in any country, not only Sudan. Sometimes certain external factors that are not taken into account or not planned-for may intervene and these factors may influence the processes of exploration and production. Sudan is such an example, where the external factors represented in the conflict in the South, played a role in the cessation of exploration. However, we were recently able to find suitable solutions and explorations will begin once the security situation improves. There will be good opportunities for exploration with our partner in the concession, Total the French Company. Indicators show that explorations will begin soon and they will be followed by a process of developing the fields.

KUFPEC has increased its investments in Egypt; it intends

to invest in the Ivory Coast, Algeria and Mauritania along with its investments in Sudan. What are the reasons for focusing on the African continent?As it has many unexplored places, Africa has become the focus of many international companies. There are actually some areas of Africa which remain completely untouched to this day and that is why international corporations are focusing on Africa, and particularly on its western and northern coasts. During the past 10 years, heavy

investment in projects in the Arab Republic of Egypt have yielded promising quantities of oil and gas. Thus, KUFPEC concentrates on Africa, just as it has previously done and is still doing in similar projects in Asia; those regions are expected to have an excellent oil future.

Are there future plans for expansion in other African countries?We are watching the markets extremely carefully, particularly the regions of Africa and South-East Asia, to take swift advantage of any appropriate and economically viable opportunity.

Does KUFPEC consider entering the European and American markets after it has already entered those of Africa and Asia? When the application of 2010 strategy began in early 2001, KUFPEC’s Board of Directors gave us the full freedom of expansion (KUFPEC’s participating countries were 7 in 2001 while they are currently 15). Now we are concentrating on areas where we have both great experience and geological knowledge whilst simultaneously seeking to access other places and discuss investment opportunities. We are currently considering China, Russia and South


We have a wealth of experience in South East Asia

and that continues to be a focus for

the company

expansion is still in force and if an economically fruitful opportunity arises, we will grasp it.

Security is in a state of a malaise in the world at the present time. Does KUFPEC worry about its investments in some unstable countries?Investment in oil is of the most important ones in any country because of its good returns; that is why countries are very keen to provide a suitable and secure atmosphere for investment

companies to ensure they continue their operations peacefully. The oil sector is a vital one, its investments are enormous, and it always provides many employment opportunities and huge incomes. We always bear in mind the political risks in any country we invest in to make them few and planned-for risks.

KUFPEC is currently implementing the three-dimension seismic survey to reduce the prospected risks in West Citra sector, Egypt. In this framework two wells were drilled early 2007. What are the results of this survey? Seismic surveys - especially 3D ones - are highly functional and essential in the process of exploration and search for oil, because they provide a clearer picture and more accurate information on the existence of hydrocarbons underground. They also provide useful information about the materials inside earth, the strata and their kinds. We always strive to reduce risks before drilling; drilling has already started in the aforementioned sites and the results are good so far.

America, but as yet have not found any appropriate opportunities which would have suitable returns, but the


We work on a purely commercial basis. Therefore,

substantialeconomic income is essential to our

operations

KUFPEC purchased 10% of the concession “Western Mediterranean” last September. What was the purpose of that step?We always strive to achieve the strategy that we promised the Board of Directors we would fulfil. It centres on two objectives:1. To obtain sectors and con-

cessions and to explore them. 2. To access productive fields,

an example of which is our acquisition of Jisom in Egypt, and in the West Mediterranean, where we bought the 10% share of British Petroleum. There is a plan to develop this field to add new quantities of oil to production and reserves to achieve the strategy.

What are KUFPEC’ plans to face the hectic competition in world markets in light of the high oil prices and the fact that most companies possess financial surpluses?Certainly competition is rapidly increasing in the global markets, especially in the field of oil explorations, but we enjoy a high reputation that is the result of our professionalism and our outstanding experience that spans 26 years, so we are welcome in many countries worldwide. To help cope with

current challenges, the company has recently followed two ways to obtain exploratory concessions and productive fields: 1- Enter the competition directly

even if it is very strong. However, the potential disadvantage of this is the fact that some competitors participate not for economic returns, but for other strategic targets, which raises prices unrealistically. Therefore, we are keen to know competitors before entering into any competition to ensure its economic feasibility.

2- Direct deals with companies to show them our desire to buy exploration shares or shares in productive fields. This strategy potentially offers us new areas of exploration and reduces competition, because offering reasonable prices leads to successful deals.

The world has recently witnessed alliances between several companies. Are there plans to in KUFPEC to make regional or global alliances? At the outset we would like to make it clear that the coalition KUFPEC targeted is to engage with other companies for exploratory concessions or to acquire productive oil fields; we do not exclude the idea

of holding alliances whether regional or international. But we prefer coalition to be in two ways: the first would be through an alliance with large firms. We are currently still seeking an appropriate, like-minded partner. The market today is tough and all companies have financial surpluses.

The second preferred route is allying with medium size companies just like KUFPEC. We have alliances of this type and we have entered into several partnerships which we believe will be fruitful in the near future. One example is our alliance with Al-Hanjariya Mall Company to purchase the Pakistani Government’s share from Pakistan


We carefully monitor markets and will not hesitate to enter into all

viable opportunities

Petroleum Limited (P.P.L). That deal was not carried out because of the current political situation in Pakistan.

What are the most important concessions KUFPEC has recently obtained?We have recently succeeded in purchasing British Gas’ share in Mauritania. These fields are now producing 18000- 20000 barrel per day with the possibility of increased production in the future.Kuwait Petroleum Corporation (KPC) agreed to KUFPEC’s entering of the “BANKAGA” in Indonesia, one of the recent concessions. This field will contribute to increases in production and reserves.


KGOC Launches Largest Project of Steam Stimulation Worldwide

Abdul Hadi Al-Awad: Steam stimulation technique helps to develop the Eocene reservoir and benefit from the enormous reserves of oil it contains.


First, would you define for us the concept of Steam Stimulation and its significance?Steam stimulation means injecting steam in the incubating reservoir of heavy oil (oil of high density), in order to stimulate the reservoir and increase the capacity of extracting heavy oil; it is a process that necessitates special techniques. Steam is injected in specific pressure, temperature and flow in different places according to certain patterns, so as to lift the heavy oil in the reservoir up to the surface in larger quantities in order to increase production and make maximum use of most of the

Spurred by the keenness to increase production and development of oil reservoirs and to keep abreast of international developments, Kuwait Gulf Oil Company (KGOC) is getting ready to use a new technique called the “Steam Stimulation Project,” on which the company places great hopes due to its remarkable financial revenues and massive production of heavy oil (from about 10% to 50%). To be briefed on the new project and its functions, KPC World Magazine met Abdul Hadi Marzouk Al-Awad, Chairman of the Board of Directors and Managing Director KGOC.

existing quality reserves that might otherwise be lost.

This project is implemented in the area of joint operations, Al-Wafra. The project consists of two experimental phases followed by a

third and final one that covers the

whole field. The target

is the first Eocene reservoir of the carbonate incubating layers of heavy oil (17-19 API gravity crude with 4.5% sulphur by weight9). The project will be supported by the expertise of Chevron Corporation (partner in the operations), a global pilot company in heavy oil extraction which specializes in the steam stimulation technique which will help to develop the first Eocene

Abdul Hadi Al-Awad

The project embodies a

qualitative leap in the oil industry throughout the

Middle East


reservoir and utilize the enormous oil reserves available.It should be noted here that this new technique and the Multi-pattern Steam Flood is the first of its kind worldwide. The advantages of the project are many. It will:

Represent a qualitative leap in the oil industry throughout the Middle East Produce billions of barrels from the original oil reserves (OOIP) by upgrading the recovery capacity from 10% at the present time to 50%. Provide many job opportunities. Mark a progressive step towards increasing production in the first Eocene reservoir for the coming 40-50 years.

The full developmental plan of the field will necessitate digging 10 thousand to 20 thousand new wells, with investments of more than 10 billion USD.

What are the major components of the experimental phase of the project?The aim of the experimental of steam stimulation during this phase is to construct and complete the

following:Drilling of 25 new productive wells.Drilling of 16 wells for steam injection.Drilling of 16 wells for monitoring and follow-up.A water station. 10 units for steam production. A system for steam assembly. A unit to automatically test the wells’ performance level. A centre for production assembly.A system for steam distribution. A system for steam recycling and recovery. A system for the treatment and disposal of water that accompanies production.A centre for engines’ control.A control room.A maintenance and support building in addition to electric connections, and routes needed for the project.

What does the steam stimulation technique include?Designing a certain pattern according to the steam stimulation technique requires a study of the

Financial revenues of the project will be obvious after it is applied on the

entire field


optimum time of the process and its quality. This in turn entails analysing pressure, temperature and the steam flood within the area of oil produced in order to reach the optimal thermal level and to get the economic benefit from the recovery and production process. Improved productivity is the ultimate aim of the process.

What are the main objectives of the project?We can summarize the main objectives of the experimental project of steam stimulation as follows:

To access essential data and information for Full Field Implementation.To carry out the necessary modifications on the project to achieve the target within the time necessary to create maximum the thermal impact on heavy oil in terms of effectiveness. To accomplish or even exceed the planned-for targets concerning production from all target layers.To formulate integrated knowledge and understanding of the technical challenges that will show up during the process of steam stimulation in a carbonate

reservoir.To reduce risks and provide health guidelines to be taken into consideration during the technical phase of the full application.

What is the overall project duration, the expected date of completion, and the estimated cost of Large Scale Project (LSP)?The overall project has been planned to reach the application

stage on the whole field in about 10 years. According to the current plan, the first steam injection in the reservoir will took place by end of 2008 and will continue along with data assortment, and close analysis of the impact on the reservoir and the productivity of wells so as to maximally upgrade its efficiency for three years to come, before entering the final phase of the project. The final phase – which will take about 7 years-, will see the application of the technique and the careful scrutiny of results on the whole field. Afterwards, production will continue to the optimum level. The cost of this project is 95 million KWD ($329 million), to be financed equally by the KGOC and Chevron, Saudi Arabia.

What are the expected financial returns after the completion of the project of steam stimulation?Any pilot project of a new technique will not achieve the desired commercial returns unless it is applied on a large scale. Similarly, here, the profits will not be tangible till the application covers the entire field. It will also mean that production of heavy oil will need to increase from 10% to 50% and that, the process of production from the reservoir will have to be prolonged. However, this will require huge investments in excess of $10 billion.


Nouri Ben Salama:The Balanced Scorecard is the modern way of measuring and evaluating performance


In 2006 KPC adopted a new system to manage the performance of its subsidiaries and main sectors. The new system has already been put into action. To shed more light on the “Performance Management System” KPC World Magazine met Nouri Ben Salama, Manager Performance Follow-up Management. At the outset, he said that KPC has always striven to upgrade and improve its and its Subsidiaries’ level of performance. It is with this goal in mind that the Performance Management System was introduced. The system translates the vision and strategy of KPC into action by turning its aims into performance indicators

that can be measured and assessed quarterly to determine the extent to which the higher strategic objective of

KPC is being fulfilled. It has been introduced by a consultancy authority whose task it was

to coordinate the relationship between KPC and its subsidiaries. The study

it undertook identified the need to change the present administrative

model, adopt the model of strategic management and re-design the main administrative processes of KPC and its subsidiaries to comply with new models, including the performance management system.

Would you like to shed light on the performance management system?The project aims to develop a system of high efficiency and effectiveness to measure and follow-up the performance of KPC and its subsidiaries while implementing the strategic targets using the method of the Balanced Scorecard, taking into account the strategic management model of KPC. The scope of the project included:

Identification of the key performance standards associated with KPC’s strategic targets.Development of methods of work necessary for the performance management system, such as: Set goals Review performance on a quarterly basis Associate the performance management system with the system incentives for KPC and its subsidiaries’ managers.

What are the key stages of the project?Before talking about the project’s stages, I would like to summarize the goals set by KPC prior to the commencement of the implementation process. These provided the basis on which KPC’s message and strategic orientations have been built. KPC’s message and strategies were thoroughly perused to identify the key elements of the performance management system. These were to:

Maximize the return to shareholders

We extensivelyreviewed

KPCmessage

The balanced scorecard

translates KPC’s message, vision

and strategy into action


Ensure optimum exploitation of hydrocarbon resourcesDevelop the local economyDevelop and promote national employmentEffectively manage issues related to health, safety and environmentManage KPC activities efficiently and effectively

Thus, relying on the methodology of Balanced Scorecard system and the specific requirements of KPC, standards have been identified that cover all the major themes enlisted in KPC’s message and strategies, such as the:

Financial perspective Perspective of shareholders and customersPerspective of administrative processes Perspective of innovation and learning

Perspective of national targets. In light of those perspectives and KPC’s strategic guidelines, 44 indicators have been identified via meetings and several workshops with all KPC subsidiary companies and sectors.

Following these, the mechanism of the performance management system was laid in sections follows: First: The translation of strategic directions into:

A set of performance measurement indicators.Major capital projects.Strategic programmes.

Second: Set annual goals for indicators, projects and programmes

Assessing the level of performance of KPC’s subsidiaries and its main sectors is conducted quarterly (every 3 months)

via the balanced scorecard

The process of performance

management is one of the key components of KPC planning

enterprise


at the beginning of each fiscal year. Targets were related to the incentives system of Oil Sector’s leaders, targets that were measurable, agreed upon, logical, feasible and of specified deadlines.Third: Monitor the key indicators such as the progression of work, and projects and programmes on a quarterly basis. These were then compared to the set targets.Fourth: Establish a quarterly review of the results with the Chief Executive Officer and Managing Directors to identify deficiencies, and objectives that require more effort to be accomplished. Fifth: Estimate the Oil Sector’s leaders’ incentives depending on the annual results of their actual performance.

During our dialogue, you mentioned the quarterly reports on the performance management system, what are their results? Reports’ results reflect the performance indicator targets which have and have not yet been achieved, and help identify the constraints and solutions that must be followed to accomplish the goal. The quarterly report also includes a summary on the work progress of some major capital projects and strategic programmes, as well as some key information such as crude oil prices, production rates, the overall manpower and its proportion of Kuwaiti workers. After that, results are reviewed by CEO and Managing

Directors. Upon estimating what has been accomplished since the commencement of the performance management system in 2006/2007, we found that many of the goals have been achieved. During the next three years, by the Will of God, we expect the performance management system to achieve all the desired results.

Are there obstacles facing the performance management system? If any are they due to lack of understanding or preparation? The performance management system is already applied in many companies, most of which adopt the approach of setting indicators and objectives. Here I would like to refer to the CEO’s -Saad Al-Shuwaib - keenness to overcome all obstacles that may hinder the performance management system from achieving its objectives. To help achieve this, the CEO will hold meetings with all Managing Directors and their deputies every six months to supplement those held on a quarterly basis. These meetings will further facilitate the exchange of ideas and discussion of the corrective steps and aspects that require further close attention.

What are the advantages for the staff of the Oil Sector when the performance management system is fully applied?The system is very beneficial because the follow-up system performance is a genuine and simplified translation of KPC’s message and strategic directions. By applying the system, KPC set specific goals and a plan of action where all that is measured

can continuously be managed and developed. This helps ensure the accomplishment of the desired goals of KPC’s message.

What are the current and future projects or activities of the performance follow-up management?By October 2008, the performance system will be automated in collaboration with the Information and Computer Systems Department, and Studies and Human Resources Department. Such a system will allow users to input and output information, and give them access to the results, reports and statistics which help them to verify improvement and progress. The automatic follow-up performance system is a significant step towards the advancement and modernization of management. Actually, it is a supportive administrative tool which will help the company to benefit from performance evaluation results and to deduce recommendations.Management will also issue a manual on KPC and its subsidiaries’ performance measurement for the Managing Directors. It will contain a summary of the performance indicators for the year 2007/08, the assigned targets and a brief definition of each of these indicators.To further highlight the role of the performance follow up Department, we will launch a website containing information on the whole initiative and its advantages and benefits, in addition to steps of building the scorecard and using it as a tool to measure performance and to store some useful references and international training courses on it.

A final wordI sincerely hope that we will all do our best to ensure the success of this work, which emerged from our conviction that the achievement of all KPC strategic directions can be fulfilled when we enhance dedication, devotion, and team spirit.

CEO will hold meetings every

six months with all the Managing

Directors and their deputies to review performance and

overcome obstacles

CEO meets KPC Managing Directors on a quarterly basis


Mina Abdullah (MAB) refinery scored the highest points (88.8) related to quality and safety in its manufacturing units and subsidiary facilities, an achievement which enhances its excellent reputation in the field of industry and oil safety. The above-mentioned score was awarded by Kuwait National Petroleum Company’s (KNPC) insurers after their visit last April. It is in the light of that visit that KPC World Magazine has fully covered the topic to shed further light on the achievements of diligent Kuwaitis in the field of quality and safety.

MAB Excels in Quality, Safety& Risk Management Throughoutthe Oil Sector


Commenting on the outcome, Eng. Majed Nasser Al-Shama’a, Manager Technical Services Management, Representative MAB Refinery Management, said: “This excellent classification is not a surprise; it is the result of the strenuous efforts of all KNPC employees to achieve company targets. KNPC Management carried out the recommendations of the insurance companies to the letter and applied them appropriately in relevance to timing and method. All the recommendations were recognized, distributed to the Departments and their implementation has been strictly and carefully followed. The actions that were taken by MAB refinery have in some cases surpassed the standards set by the insurance companies, something which has ensured that the refinery has attained the highest standards of quality and safety.”

The Concept of RisksAl-Shama’a summarized risks of the assets in two types: 1. Periodical maintenance risks, and fires 2. Risks caused by the crew in charge of operating those assetsTo address those risks KNPC put into action a set of procedures that ensured maximum safety and security. KNPC offered training courses to individual employees, particularly those in key posts of responsibility. In addition to issuing scientific references for the units and regular investigation visits. To improve maintenance standards, the company instituted a comprehensive system that took into account many important points, the most important of which was the readiness to safely operate the equipment. To help achieve this, all used equipment was improved to keep pace with recent technological developments; this included changes to some equipment that had been in place since 1980. Moreover, seven key modifications were made


to the refinery’s control system to guarantee the required level of security. Thus MAB refinery now has in place the most up to date international safety systems.

Field VisitsMohammad Kamel Abu Al-Geit, Coordinator Inspection and Corrosion MAB, talked about the Insurance companies’ visits to the refinery: “Last April, a delegation representing the refinery’s international and local reinsurance companies visited the refinery, accompanied by a representative of the Risk Management KPC, and a representative of Insurance Company Administration KNPC. The visit lasted for three days, during which the delegation met a number of officials and staff members to be briefed on operational matters at the refinery. On the first day, the delegation met MAB’s Deputy Managing Director, and listened to a lecture on the refinery’s achievements during the past year, focussing on the techniques, safety procedures, prevention of risks and procedures followed to implement the insurance companies’ recommendations from the previous year. On the second day, the delegation toured the refinery checking all its units and facilities in order to note the difficulties or obstacles that might affect the units or cause their stoppage, as well as to ascertain the availability and accessibility of all the documents, emergency plans, and updated data registration forms. On the third day, the delegation met Managers of Departments to discuss and review the importance of data forms, and their completion. By the end of the visit, 9 new recommendations were presented by the delegation to be implemented before the next visit. The recommendations were merely some observations that can be implemented within a few days and at no exorbitant cost.”

Al-Shama’a: Our achievement is the

outcome of the strenuous efforts

of the whole KNPC staff

Al-Ajmi: Safeoperating

following the latest world standards,and the recent

security and safety systems are the most important

strategiesemployed at MAB

refinery


Eng. Abu Al-Gheit continued: “One month after the delegation’s visit, we received a detailed report and its recommendations. The report included MAB scoring a high rating in risk classification that reached 88.8 points, the highest rate among all companies, refineries, the oil sector institutions in Kuwait. Note that the previous rate of the refinery was 86.6 points.”

17 RecommendationsAbu Al-Gheit stated that the insurance companies pay a three-day visit every other year that is called the Full Visit, and an annual half day visit to monitor the implementation of recommendations. On its previous visit in 2005, the delegation made gave 17 recommendations 14 of which were completely accomplished. Currently work is being done to implement the

Abu Al-Gheit:We have

accomplished 14 recommendations

since 2005

Al-Shummari:Engineering and

MaintenanceManagementfollowed pre-

preparedprocessing method

in the refinery’s units to reduce the recommendations

of insurance companies

Al-Khayyat: We send the insurance

companies a detailed quarterly report about the

accomplished work according to the

recommendations


three remaining long-term targets.The insurance companies take into account several points when considering the implementation of recommendations:

The expertise of those in charge of implementing the recommendations (they must be fully aware of their job duties)The extent of the company’s interest in rapidly implementing and accomplishing the recommendations.Which of the targets set by previous recommendations have been met.

Recommendations of the Insurance Companies

Ali Al-Ajmi, Team Leader 4th Region, divided the recommendations of the recent insurance companies’ visit into two parts:

Section I is for work and maintenance systems to be compared with the international labour regulations, bearing in mind that KNPC has a special system of work and maintenance. It also adopts security and safety systems that are in line with the latest global systems in this area. Section II is dedicated to the replacement of some insulation and control systems in the refinery with new fireproof ones. Insulating fuses also have to be covered with fireproof materials. This expensive recommendation

(tens of $ millions) will be implemented in the years ahead.

Strategies of the RefineryAl-Ajmi proceeded: “MAB refinery is operated according to precise strategies, such as those related to safety, that are in accordance with international standards, through the adoption of the latest security and safety systems.

Preparations for the insurance companies’ visits are the responsibility of the Engineering and Maintenance Management. This group also has to manage contracts and raw materials, monitor contractors and budgets, and modernize the refinery’s units to increase

their operational capacity through careful maintenance of specialized equipment.

Al-Ajmi clarified that strategies adopted by MAB always stem from the integrated KNPC strategy that focuses on: 1- Pre-eminence in performance. 2- Maintaining human resources

by:Professional development of staffSupporting community activities

3- Continuous commitment to correct practices in the course of action through: Safe operating. Proper maintenance in accordance with the international standards.


AchievementsEng. Salah Al-Khayyat, Team leader 3rd Region, briefed us on MAB recent achievements: “The delegation from the insurance companies highlighted three key achievements:1- Removal of the off-work units

while still maintaining a high level of security and safety within the refinery.

2- Development of the contaminated water treatment plant, which was established in 2003.

3- Recording of all work permits in special records.

Al-Khayyat said that KNPC sent the insurance companies, via KPC, a detailed quarterly report on the

volume of work carried out as per their recommendations.

A Committee for Each Recommendation

Commenting on MAB’s high rating, Abu Al-Geit said: “MAB Management realized 5 years ago the need to form a team to follow up and implement the recommendations of insurance companies. It established a committee that included a number of highly-qualified employees selected from each department, and held weekly meetings to ensure that recommendations were implemented. MAB wholeheartedly committed itself to accomplish the recommendations as soon as possible. It was the team spirit and

compatibility with the objectives set by the Management that enabled us to achieve this.”

The Role of Engineering and Maintenance

Regarding the role of Engineering and Maintenance Management, Eng. Mohammad Saud al-Shummari, Team Leader Maintenance Planning & Acting Manager Engineering and Maintenance said, “As soon as it receives the insurance companies recommendations, MAB management prepares for implementation, taking into account the short-term recommendations and the long-term ones that require purchasing new raw materials or making deals with contractors to implement them, such as changing or removing the old units from the refinery, or protecting the insulating valves.”Al-Shummari explained that Engineering and Maintenance Management followed the pre-processing method in MAB units in order to reduce the number of recommendations, pointing out: “A group from all the sections of the Engineering and Maintenance Management is formed for each recommendation in order to follow-up and implement it according to a scheduled plan. Some recommendations are difficult to implement since they require the stoppage of some refining units. As these units can not be closed for 5 years, some recommendations have to be deferred until an appropriate time. Actually, this is one of the biggest challenges facing the refinery.”


To qualify leaders to immediately occupy vacant positions

Bassem Issa: Career succession is the most potenial project currently applied plan throughout the oil sector


At the outset, we would like to identify the meaning of Succession Plan.Succession Plan means qualifying a group of leaders, whether from KPC or from the Oil Sector, to be prepared to immediately assume leading posts (posts that are vacant for reasons such as resignation, retirement or moving to another position), to avoid any defect in

Bassem Issa, Manager Planning and Career Development, said that the Oil Sector is currently facing great challenges represented by changing production quantities and most significantly by the changing levels of international demand. Also having an impact is the strong competition among the major international companies. Issa pointed out that those challenges required the development of administrative systems, together with the strengthening of human resources within KPC and its subsidiaries to keep pace with global developments, and to maintain KPC’s prestigious position at both regional and international levels.KPC World magazine met Issa to shed light on the plans of developing the management and the succession plan project, which was applied in February 2006.

the management. This requires the preparation of personnel in both administrative and developmental terms through training courses that acquaint them with the responsibilities of the leading positions.

What steps are being taken to implement the project? The Succession Plan project

began in collaboration with the Consulting, Technology and Outsourcing Services Company Accenture in February 2006. The project underwent several stages of development:

Study the process of sequence career Study the results of sequence careerIdentify candidates for vacant positionsMeasure and estimate the readiness of staff members of the career sequence project through the following steps:

1- Conduct interviews2- Conduct on-field surveys to

specify the requirements 3- Evaluation according to the

performance level4- Consider the vocational and

training record.

Global challenges necessitate the development of administrative

systems and human resources

Bassem Issa


In conjunction with Accenture, we set one concept for the responsibilities of a specific post. In the past, KPC’s subsidiaries used to adopt methods relevant to the responsibilities of the managers, managing directors and their deputies). Now it is agreed via the same assignments and responsibilities for all the managing directors and their deputies. The role of the Managing Director or his/her deputy is to monitor the strategic plans and their implementation, and not to manage; that remains responsibility of the manager of the Department.

Furthermore, we conducted interviews with all the Managing Directors, their deputies, managers, and all those who are in charge from KPC and the Oil Sector, to know their views on jobs’ responsibilities. After these comprehensive surveys, we deduce the following points: 1- Identify each leading position

and its responsibilities. 2- Analyze the results of the study,

and accordingly determine the appropriate qualifications.

3- Identify jobs’ requirements as follows:Special job requirements. General qualifications. The candidate’s qualifications and experience.

Our findings were submitted to the Board of Directors and were ratified. We have begun the application stage, in which responsibilities to be applied will be determined and the level of leaderships, in KPC and its subsidiaries, will be estimated through applying the 360 degrees, estimation system, as suggested.This system is internationally ratified to measure leaderships’ qualifications in KPC and its subsidiaries, in relevance to the following positions: Managing Director, deputy managing director, and manager. To implement the project a contract was established with Success Factors Company, a universally recognized company in

the vocational estimation field. The contract was of two sections: • The 360-degree Assessment. • Implementing the process of Succession Plan, i.e., to enlist people who can occupy leading posts.The test process began in early April 2007, while the last date for submitting the system’s data was 31 July 2007.

What is the last phase of the project?The last phase is divided into:- The evaluation phase. - The analysis of the evaluation results and accordingly drawing the map of the career sequence that will demonstrate the readiness of employees to occupy leading posts. Depending on the final results, clear-cut development plans for leaders in KPC and its subsidiaries may be set. I believe that the project of career sequence is the project with the highest potential for success that is currently implemented in the Oil Sector. Success of the Oil Sector is measured by the success of its employees, and consequently its management. The successful manager is not only responsible for the technical matters in the sector, but also for the staff members’ issues because he/she is expected to be keen to develop his/her personnel’s performance, along with his/her successful management.Today, we are investing in human resources to meet the striking challenges which have recently increased. The status-quo requires successful and qualified managers to contribute to progress. Led by the Chief Executive Officer, the significance of this project and the eagerness evident in managers for its implementation and success can be seen.

Are there training plans in addition to the Succession Plan Project? Now we are working on two parallel

lines simultaneously because along with the Succession Plan Project, we conduct many courses that focus on qualifying managers. Several training and developmental courses were conducted in the Training and Career Development Sector Training Department, Al-Ahmadi. One such course, for example, entitled “How to be an Influential Board Member”, makes employees aware of the laws and provisions that individuals in boards of directors are committed to. We have benefited from the experience

It is the first time that we

apply the system of identifying posts and their requirements


of General Electric Company in the field of management and leadership styles’ development, along with the expertise of our previous Oil Sector staff, like Ahmad Al-Arbeed, Chairman of the Board of Directors Petroleum Development Company, who presented several lectures on the Oil Sector; and Nader Sultan, former Chief Executive Officer KPC. Note that the programmes outlined by KPC for managers are remarkable, so through adopting them we hope to achieve our objectives to develop and upgrade the Sector to the desired level.

Don’t you think that the idea of applying the programme of Succession Plan comes rather late?The application of the Succession Plan programme comes just in time because it is now that the challenges have increased considerably both on regional and international levels. The Plan necessitates modern management systems, which urge us to develop rapidly and have a clear perspective in order to be ranked among the most successful and reputable international corporations.The concept of management to major companies is different now; and the new challenges make everyone seek development through various training programmes. Now, there is a strong belief amongst the departments’ managers in the importance of training leaders to be ready for the future.

What are the results of these applications on staff? I mentioned earlier that the most valuable investment Kuwait is making is in its youth, so we are keen to

equip ourselves with the most recent management systems to ensure readiness for the next phase. As such, there is a need to qualify staff to be able to occupy positions in medium or supervisory departments, in addition to the upper management.The Upper Management is deeply concerned with scientifically and practically rehabilitating the youth, to provide them with the needed experience to meet the challenges and problems of current times. . In the absence of the application of Career Succession Plan there would not be a reference available for the Oil Sector leaderships who are ready to assume posts in the Upper management. There would not be a clear system to combat the underperformance in current leadership competencies, through the approved development programmes provided by the Training and Career Development Sector. In conclusion, I would like to extend my sincere thanks and gratitude to those who have greatly contributed to the success of this project; namely Shatha Al-Sabah, Managing Director Training and Career Development, for her unsurpassed support and confidence; Hani Hussein, former Chief Executive Officer; Riyadh Al-Yaqout Deputy Managing Director Training and Career Development for his continuous contributions and effective participations in the project; I would also like to thank other key contributors to this project. These are:

Salma Hajaj, Kuwait International Petroleum Company. Samar Dawood, Development Team-leader. Houwaida Abdullah, Administrative Assistant.

We have contracted with the best internationalcompanies to implement

programmes of the Succession Plan


Despite a business boom fuelled increase in charitable activities such as benefactions and contributions to social investment projects in the Gulf region, the concept of corporate responsibility towards the community is new to the Middle East. Equate Company for Petrochemicals is considered a pioneer in applying this concept. To discover more about Equate’s social responsibility policies, we met Mahmoud Al-Qattan, Deputy President Equate and Head of Equate’s Corporate Social Responsibility (CSR) Team.

An integral part of its vision and strategy

Mahmoud Al-Qattan: Social responsibility programmes are on the top of Equate’s priorities


What is the concept of CSR and how is it tackled?CSR is our commitment to improve the quality of life of Equate’s employees and of society at large, through voluntary contributions and those from institutional resources, to achieve sustainable results. CSR is an integral part of Equate’s vision and strategy, it is what unites the company and motivates it to achieve further success. From this standpoint, Equate is committed to proactive social responsibility programmes, ones that cover a range of social issues that concern the community. We have dedicated a full-time working team to the

development of social responsibility strategies in the company. The CSR Team consults with the key partners and beneficiaries, and monitors the performance and effectiveness of social responsibility projects.

What are the social fields covered by CSR Equate?CSR Equate is primarily concerned with two areas of social responsibility: educational support activities and community outreach programmes. In the area of education, CSR team has launched a professional development programme, which is aimed at giving an opportunity for Equate’s employees to continue their academic studies. University graduates and holders of Masters Degrees specialized in technical science and engineering are especially encouraged to make the most of this support. Four of Equate’s staff have been accepted onto this programme but more will follow soon as many applications are still being processed. The programme is conducted in cooperation with the Ministry of Education and Higher Education, which has helped establish certain eligibility criteria. The Ministry of Education and Higher Education also helps administer the second programme, a scholarship programme for graduates who want to specialize in polymer engineering quality systems engineering, and metals or corrosion engineering. Once again, students are required to meet governmental requirements to obtain scholarships.

Is the scholarship programme limited to the company’s staff? Equate also provides academic scholarships for senior high school students who are not working in the company. Their employment in Equate is not obligatory after graduation. Five Equate-sponsored students have recently been accepted to continue their higher studies in the United States.

More than 4 thousand high school students from 17 schools

participated in the cancer campaign: “Pink for Life”

We have a full-time team to develop

Equate’s strategies and policies on the community level

Mahmoud Al-Qattan


Does Equate’s CSR programme cover other areas? Equate is committed to organizing public awareness campaigns and long-term programmes to educate the community about important issues. For example, this year Equate and the Kuwait Society for Oncology have jointly launched a campaign for the prevention of breast cancer through self-examination under the slogan “Pink for Life.” With the efforts of volunteers from Equate and the help of specialist doctors, 19 lectures were organized in schools, universities and companies. These lectures were attended by over 4

thousand women. The project also sponsored a number of ceremonies in the commercial complexes, where practical examinations were conducted by specialist doctors.

What was the response to this

campaign?The campaign has been impressive and was enthusiastically welcomed by a large number of women (more than 400). Equate is still receiving requests from various authorities which are keen to host the campaign.On the official level, Dr. Massouma AL-Mubarak, Minister of Health, highly commended the campaign during her attendance at one of its events. With this in mind, I would like to thank the Minister for her continuous support which raised the Team’s morale to implement further voluntary activities.

Our educational programmes are not only directed to Equate’s staff


Does the company sponsor activities that support the work of the Government’s “Tarsheed” program?Certainly, we have formed a Team Equate for economizing the consumption of electricity and water.

The Team outlined a long-term plan aimed at reducing consumption of electricity and water in Equate. The plan has already been launched and the implementation process has been excellently received by the staff. The result was a considerable

decrease (almost five megawatts) in the consumption of electricity during last June. Yet, Equate’s staff and management are determined to move forward with this plan, spurred on by their sense of responsibility towards Kuwait. It is noteworthy that the company started the awareness campaign at a national level via the daily newspapers as well as through Kuwait TV and Al-Rai TV in the summer of 2006.

What about the future activities of Equate’s CSR? The Team is currently preparing a programme to educate the community about industries and plastic products, and to encourage recycling. The outreach programme is directed at school students and the public in general. Workshops and visits to Equate are organized, as well as other social activities such as competitions in commercial complexes, public parks and scientific centres, the publication of information on Equate’s site and sponsoring of campaigns to clean up the beaches of Kuwait. No doubt these activities are all part of Equate’s remarkable contribution to the national economy.

A final word? I would like to point out that our responsibility to the community goes beyond the traditional charitable practices and direct contributions; we also directly target the community with long-term developmental activities. At a time when Equate pays utmost attention to the programme of social responsibility, it continues its charitable work through direct donations that focus on supporting institutions concerned with people who have special needs. Moreover, through the Equate Donations Committee headed by Hamad Tarkait, Chief Executive Officer, Equate Company for Petrochemicals , it supports the work of educational and health institutions.


As part of its ongoing efforts to combat the environmental pollution resulting from its operations, KNPC has recently undertaken a new initiative called, “Clean Fuel”. This project represents a great qualitative leap on several levels, most importantly the environmental one.About the project and its importance to the State of Kuwait, KPC World Magazine interviewed Bakhit Al-Rashidi, Manager Comprehensive Planning KNPC, about the significance of this project.

Bakhit Al-Rashidi: The Clean Fuel Project, a New Strategic Leap in KNPC


The new project puts KNPC’s refineries in

competition with world refineries

Would you please define what is meant by “Clean Fuel”?Clean fuel is environmentally friendly fuel that meets all the accurate specifications required by global oil-products markets, in order to preserve and maintain the environment. This development is very important for the company, one that will enable it to compete in global markets, as well as ensuring a stable market for Kuwaiti petroleum products in the medium and long term periods.

How is clean fuel different from lead-free types?KNPC’s introduction of lead free fuel in 1998 meant that Kuwait was the first Gulf State to dispose of lead. This lead-free fuel (petrol) was meant only for cars, whereas clean fuel includes all types of fuel produced by KNPC’s refineries such as car, aviation, diesel and heavy fuel.

Will clean fuel solve the problem of environmental pollution in Kuwait? First it should be noted that since June 2006 KNPC has been marketing low-sulphur diesel fuel in all gas stations and has consequently reduced sulphur in fuel oil (diesel) to 2 per thousand. This major achievement complemented the company’s other major success, the introduction of unleaded gasoline in 1998; both initiatives have made major contributions to the protection of Kuwait’s environment. The clean fuel project is really a strategic leap that enables KNPC to produce all types of environmentally friendly fuel, ones which meet all the strict specifications in the medium and long term periods. Certainly, this kind of fuel will have a great impact on preserving and protecting our environment in Kuwait. Additionally, a stable world market for Kuwaiti products will be sustained.

Does KNPC have the adequate modern technology to get rid of lead compounds in petrol, and reduce the sulphur content?As was mentioned earlier, KNPC introduced unleaded petrol to the market in 1998. For that past eight years, it has made effective


and continuous use of modern technology to produce this type of fuel, and this kind of petrol containing a low percentage of sulphur. In the near future, KNPC will build new units within the scope of clean fuels project, which will produce fuel with sulphur ratios that are less than 10 particles per million.

What is the economic feasibility of the project?The economics of the project have been evaluated on different levels in terms of the prices of oil, petroleum products and capital cost. All of these studies demonstrated the economic feasibility of the project. It must be emphasized here that the implementation of the Clean Fuel Project will put the company’s refineries in an excellent competitive situation compared with world refineries in terms of capacity, commitment to the most stringent environmental standards and safe operation, and


KNPC has the modern technology that enables it to to ensure a stable world market for Kuwaiti products

the ability to produce high-quality products in accordance with required international products’ specifications until 2020.

To what extent do the international companies care for the implementation of the project? Global contracting companies have paid great attention to the implementation of this project. This concern became clear when KNPC began the implementation of this project through Reimbursable Cost which adopts the monthly payment of labour costs plus the price of raw materials, with a margin of profit. This method will contribute to the

reduction of costs because it will be based on real business executed and avoid the risk element concerning the international contractors and their exaggeration resulted from their fear of the fluctuating prices of the raw material or wage employment.

There are some rumours saying that certain foreign companies operating in the refining industry refused to participate in the project because of its economic unfeasibility? We have already ensured that the project economics are adequate and that its implementation will enable KNPC to remain competitive in world markets. KNPC did not request any foreign involvement in the project because it has qualified national cadres that have proven their ability to manage and operate the company’s current refineries, as well as the implementation of Clean Fuel Project. We must re-emphasize that KNPC is a subsidiary of Kuwait Petroleum Corporation (KPC), and it is a 100% Kuwaiti company. It did not ask for the partnership of any of the foreign companies operating in the field of oil refining, to manage, or operate the existing refineries or the expansions to be constructed within the project of the Clean Fuel.


Negligence, Failure to Follow Safety Guidelines Are Reasons of Parking Lots’ Fires

Hundreds of cars are aligned in multi-storey parking lots, whether under residential buildings, or in governmental commercial, tourist, and industrial centres.

The design of these parking lots differs according to whether they are over or under ground level. What really concerns fire-fighters in case of fires is providing protection and safety conditions on-spot. That is why owners of these crucial places should ensure safety requirements. Car owners should also make sure that there is no defect in the safety

of their cars that may lead to the outbreak fire during the stop. Since most parking lots have only one exit, cars will be crowded on the way out, accidents occur and people squabble on the way out. Early warning systems and fire-protection systems should be installed in car parks. It is also vital to ensure that more than

the adequate number of exists is available, especially in an emergency evacuation.The problem facing those in charge at the outbreak of the fire is the difficulty of recognizing car owners. Thus, fire begins to spread from one car to the other before the arrival of


Humoud Hamad Al-AjmiCoordinator Safety Operations

fire-fighters, or before car owners can be asked to remove their vehicles from the site, especially if they are in a commercial or shopping mall, or employees in governmental institutions.A serious fault is committed by many people when parking their

vehicles behind other ones, or partially on the pavement. Doing so impedes the safe exit of vehicles in emergencies especially with the great numbers of cars. That is why the number of cars allowed on each floor should be as per the number of available places,

so as to avoid delays in case of fighting fire, to avoid the crowds on emergency exits. It is also necessary to provide parking lots with early warning systems and an automatic fire-fighting system. Simple negligence and failure to follow procedures and instructions of fire safety may cause serious injury or loss of life.


KPC Strives to Become a Regional Leader in Health, Safety and Environment

Submit press releases, news items, story ideas, attendance at conferences and symposia, reports on visiting dignitaries and letters to the Editorial Team at the Media Relations Department. Reproduction in any form is prohibited without prior written permission from the Editor in Chief of KPC World.

P.O. Box: 26565, 13126 Safat, Kuwait - Fax: 499 4991Email: [email protected] - www.kpc.com.kw

Career Succession is one of the Premier Projects …Quarterly Magazine, Issue No. 42, October 2007...

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Transcript of Career Succession is one of the Premier Projects …Quarterly Magazine, Issue No. 42, October 2007...