KUWAIT CITY - A committee has been established to oversee the comprehensive merger of the Kuwait National Petroleum Company (KNPC), the Kuwait Integrated Petroleum Industries Company (KIPIC), and the Kuwait Oil Tanker Company (KOTC). The committee, formed on August 12, 2024, is chaired by Wadha Al-Khatib, CEO of both Kuwait National Petroleum and KIPIC.

The formation of this committee follows a memorandum from Sheikh Nawaf Al-Saud Al-Sabah, CEO of the Kuwait Petroleum Corporation, dated July 18, which approved the merger.

The committee, comprising 11 members, includes experts from financial, legal, and gas transportation departments, and is tasked with completing the merger process within six months. This merger is anticipated to yield annual savings of $2 billion. The successful integration of these companies aims to enhance efficiency and consolidate operations within Kuwait’s oil sector. The merger process between the KNPC, KIPIC, and the KOTC has commenced due to the complementary roles of these entities. The KNPC manages the Ahmadi and Mina Abdullah refineries, while KIPIC oversees the Al-Zour refinery.

The merger aims to consolidate these refineries under a single entity to streamline operations and rationalize spending. Additionally, integrating the liquefied gas-filling operations of the KOTC with the KNPC aims to centralize marketing efforts, enhance efficiency, and reduce the risk of accidents at the gas-filling plants. The merger is projected to save between $1.5 to $2 billion annually by cutting costs related to security, maintenance, and management salaries.

The unification will also facilitate better implementation of digital transformations, boosting business volume and reducing bureaucracy. The full merger of these companies is expected to be completed by 2025. Sheikh Nawaf Al-Saud Al-Sabah, CEO of the Kuwait Petroleum Corporation, is focused on this initiative to achieve significant cost savings, enhance operational efficiency, and support the corporation’s broader goals. Furthermore, there are ongoing efforts to integrate the Kuwait Gulf Oil Company with the Kuwait Oil Company, with an announcement likely within this year. This merger is part of a strategic vision to consolidate similar activities and enhance overall efficiency.

Studies on the merger indicate that it will not negatively impact national labor and is essential for achieving the KPC’s 2040 strategy. The consolidation is expected to enable the corporation to increase its production capacity to 4 million barrels per day or more and better meet Kuwait’s gas needs, potentially reducing the country’s reliance on imports.

The direct merger between the oil companies is expected to result in increased profitability for the entities affiliated with KPC. This anticipated rise in profits is expected to lead to higher revenues and reduced expenses. The merger aims to address the decline in profits experienced by some companies in the 2023- 2024 budget compared to the previous 2022-2023 budget. By consolidating operations and streamlining management, the merger is projected to enhance operational efficiency, lower costs, and improve financial performance. This strategic move aligns with the KPC’s goals to bolster profitability and achieve better financial outcomes in the coming years.

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