A number of major changes have occurred in the global economy and oil markets since the KPC 2030 Strategy was developed in 2008. In addition, a number of changes have also occurred within Kuwait’s national oil industry.
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Accordingly, some of the directions stipulated in the 2030 Strategy are no longer valid and require updates or extensions. In order to rectify these changes and make accommodations for new adjustments, last year KPC began to update its strategic objectives for the K-Companies to cover the period leading up to the year 2040.
KOC, along with KGOC and KUFPEC, assisted KPC in developing these new strategic directions. A “Strategic Directions Review Committee” was set up, sponsored by DCEO Planning & Commercial and headed by Manager Planning, and consisting of Manager Field Development North Kuwait, Manager Field Development South & East Kuwait, Manager Field Development West Kuwait, Manager Gas Field Development, Manager Field Development Heavy Oil, Manager Exploration and Manager Reservoir Management. Their role was to provide feedback on KPC’s Scenario Analysis and Forecast, KPC’s Situation Analysis (Benchmark, Baseline, SWOT) and to provide feedback and input in regard to updating KPC’s Mission, Vision & Values.
KOC identified six options with different crude capacities and gas production profiles for consideration by KPC. KPC finally selected one option, based on an assessment completed on feasibility for the business and KPC. This was considered Phase I, which was completed in September of 2016.
This new strategic plan is considered to be one of the most challenging strategies by KPC and the K-Companies. KPC has set the Upstream Strategic Directions based on “Available Production” and not based on “Production Capacity” as it has been used in past strategies. “Available Production” means, in general terms, the amount of crude that can be produced at any day of the year after applying facility shutdowns and maintenance activity considerations.
Following this, in April of 2017, KPC initiated Phase II and requested all K-Company subsidiaries and areas of operation to develop and update their Strategic Plans and to develop detailed initiatives and implementation road maps describing how they planned to meet KPC’s Strategic Directions, including defining resource requirements, risks, refined strategic pre-requisites and the key performance indicators to measure the value of the implementation initiatives. The KPC 2040 Strategic Planning Guidelines were provided to outline the governance, process and describe the content of Strategic Plans that need to be submitted to KPC.
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KOC, KGOC and KUFPEC, as upstream companies, adopted the following approach to update their Strategic Plans and to develop initiatives and implementation roadmaps:
Stage 1: Initiation/Preparation
Stage 2: Update Domestic and International Upstream Vision & Mission
Stage 3: Conduct Upstream Sector Situation Analysis for KOC, KGOC and KUFPEC
Stage 4: Develop Domestic & International Upstream Strategic Plan for KOC, KGOC and KUFPEC
a. Defined Strategic Objectives for Domestic and International Upstream sector
b. Defined KPMs
c. Evaluated strategic options
d. Developed core business strategic initiatives
e. Developed strategic enabling initiatives
f. Developed a detailed implementation roadmap
g. Identified key Success Factors/prerequisites, timing and accountability
An Upstream Governance structure was established to align KOC, KGOC and KUFPEC plans and work. Within KOC, the “Phase II 2040 Strategic Plan Development Committee” was formed, sponsored by DCEO Planning & Commercial and headed by Manager Planning, and consisting of Manager Field Development North Kuwait, Manager Field Development South & East Kuwait, Manager Field Development West Kuwait, Manager Gas Field Development, Manager Field Development Heavy Oil, Manager Exploration and Manager Reservoir Management. Manager Human Resources, Manager Public Relations & Information, Manager Management Support, Manager Health, Safety & Environment, Manager Corporate Information Technology, Manager Financial Accounts & Services, Manager Financial Systems & Control, Manager Research & Technology, Manager Research & Development and Manager CEO Office Group were also called upon on an-as-needed-basis, to help refine the critical Strategic Enablers. The outcome of this effort resulted in the creation of a solid Strategic Plan that provides focus and enables KOC to remain as a leading company in the global oil and gas business.
Taskforce Teams were set up, headed by Manager Field Development and consisting of representatives from Field Development, Exploration, OTS, Reservoir Management and Directorate Planning Team Leader, to develop the Strategic Initiatives required to achieve the 2040 targets. The Taskforce Teams met on a weekly basis to develop the strategic initiatives and roadmap. The following was detailed for each strategic initiative:
- Timeline and milestones
- Responsibilities
- Critical programs (and projects where applicable)
- Technology requirements
- Risks
- Capex and Opex requirements
- Manpower requirements
- Capabilities
- Equipment requirements
- HSSE considerations
We would like to take this opportunity to thank all those involved for their hard work, commitment and dedication to this critical project. Oil is currently the most important source of global energy, and it will continue to be so for decades to come. This situation provides interesting business opportunities for our Company, but also places an important responsibility on the State of Kuwait to maintain its global market share in light of the emerging challenges.
Those challenges are both internal and external to the Kuwait Upstream Sector. Internally, we are entering a new phase of our operations, in which the applications of new technologies to increase the recovery from our reservoirs, the increasing size of exploration in new frontiers, the expansion of our drilling activities with the incorporation of innovative drilling techniques, and, most importantly, the changes that we need to implement to become a more dynamic and competitive company, will be critical factors in the implementation of the strategy.
Externally, we will continue facing a business environment with volatile oil prices, and the increasing competition from other producers around the world, which will force every company to make a great focus on efficiency and cost reduction to remain competitive.
So far, our joint effort as employees, contractors and international companies towards the achievement of the Company’s strategic goals has proven to be of great success, having a significant impact in increasing the production capacity of the Company. The requirements of the national development of the State of Kuwait and the need to continue creating employment opportunities for the younger generations of Kuwaitis, require us, more than ever, to continue working as one team towards the establishment of a clear strategy and a feasible roadmap that can lead to the prosperity and development of our country.