on behalf of DCEOs, all employees and myself, I have the pleasure to present to you Annual Report No.37 of the company for FY 2017/2018 ended as at 31st March 2018.
- The company made actual profits amounting to KD 196 million for FY 2017/2018. But in view of forming a validity allocation for the assets of fertilizer plants set for sale following KPC board of directors’ resolution closing up the fertilizer plants, this led to the decline of these profits to KD 131 million, at an increase of KD 72 million over the figure approved in the budget, which is KD 59 million. The company did not record any losses by the joint venture companies. The company saved 10% of its operational expenditures for the current FY. That refers to the efforts exerted by the management, employees and all participating companies that helped achieve the best results amid the sheer fall of international oil prices and strong competition in the petrochemical market.
- Joint venture companies continued achieving excellent financial results by the end of 2017. Equate Company made KD 234 in net profits, equivalent to 162% of what was planned. The Kuwait Olefins Company (TKOC) made KD 109 million in profits, equivalent to 141% of what was planned. Gulf Petrochemical Industries Company (GPIC) made KD 10 million in profits, at an increase by 165% of the approved budget. SK Advanced made KD 13 million in profits, equivalent to 126% of the approved annual budget.
- By the end of FY 2017, Kuwait Aromatics Company (KARO) made KD 43.3 million in profits, at an increase by 344% over the approved budget. Kuwait Paraxylene Production Company (KPPC) made KD 27 million in profits. The company successfully made the 1st annual overhaul since commissioning. By the end of FY 2017, the Kuwait Styrene Company (TKSC) made KD 28 in profits, at an increase by 165% of the approved profits in the budget.
- The strategic plan 2040 for PIC was approved in a way commensurate with KPC strategic trends.
- Urea plants produced 112% of the virtual budget and ammonia plants produced 104% of the virtual budget. The Polypropylene plant produced 118% of what was planned. A new record figure was achieved in the Urea export quantity during FY 2017/2018 reaching 1,178,860 metric tons while the previous record figure was 1,101,708 metric tons during FY 2016/2017.
- In support of local economy, the company pursues efforts to boost local private sector participation in petrochemical projects. The company launched for the private sector 2 opportunities represented in setting up BOPP plant and PP Raffia plant besides a 3rd opportunity in cooperation with Equate for setting up LLDPE/HDPE plant.
- In execution of HH the Amir’s directives for using 15% of the electric power consumption through renewable energy, the company executed the project of installing solar energy panels at the Head Office for the use of around 32% of the electric power consumption at the Head Office depending on renewable energy. The execution of LEED project for saving energy at the Head Office building and Bubyan Club was completed for reducing energy consumption.
- The company has applied many cost-cutting initiatives, including Six Sigma program that resulted in executing 30 projects successfully and achieving financial saving estimated at KD 5 million during this year. Thus, the company has achieved a cumulative saving of KD 74 million since applying this methodology in 2007.
- As for risk management, the company issued the petrochemical report in cooperation with KPC in line with the new requirements special for BEPS. It also sponsored comprehensive risk management (CRM) society of the oil sector. In this regard, 2 main meetings and a workshop were held in addition to preparing the page content of CRM society on the electronic gate of the oil sector and providing it with whatever belongs to risk management work for publishing information and exchanging information and expertise.
Plant Safety Performance:-
The company has committed itself, over a long time ago, to the SHE principles and to strictly circulating this commitment along all of its vital activities through field training of Safety Department employees at fertilizer plants, holding awareness meetings for all PIC employees and regular continuous inspection of all instruments and safety equipment. Within this framework, the following has been done:
- The company achieved more than 8.8 million man-working hours without lost time accidents. No environmental incidents were recorded against the company since 2012 up to the current year 2017/2018.
- Completing the closure of all recommendations relating to industrial incidents during the current FY. All requirements and corrective measures special for KPC Significant HSE Gaps-Mitigation Plan were also completed.
- Obtainment of HSE golden “RoSPA” and revalidation of all ISO certifications.
- Keeping safe operation of ammonia and urea plants in addition to achieving record production figures for this year.
Through Social Responsibility programs, the company is keen on supporting development in health sector, keeping the environment and other social services, including for instance:
- Organizing a blood donation campaign in cooperation with the Central Blood Bank. It witnessed large turnout by the employees who displayed positive response and great awareness of the importance of blood donation and its positive results.
- Holding a presentation and a workshop titled “Planning for a Healthy Life” within the framework of exchanging expertise and optimal practices between oil companies. The company also participated in the events of the 42nd Kuwait International Book Fair within KPC and subsidiaries’ pavilion.
- The company made many social initiatives, such as making school gardens green under the slogan of “our environment…our responsibility” and sponsoring the 2nd soccer championship of Ahmadi Governorate Co-ops.
The company kept in line with development at the level of sustainable development by laying down long-term objectives and performance measuring indexes. It is in the process of preparing the 5th sustainable development report according to Global Report Initiative (GRI) requirements.
Developing the employees and providing them with the necessary skills that enable them to optimally perform their duties are among our most important priorities. We are 100% committed to employee personal development plans, realizing 70 training hours per employee during FY 2017/2018.
It is recalled that the company is very interestedly following up the Kuwaitization and replacement plan. The Kuwaiti manpower ratio reached 86.6% while Kuwaitization in entrepreneur’s contracts reached 30% of the total number of employees compared with the 25% ratio approved by KPC.
The company is seeking to achieve growth in petrochemical industries and enter downstream products in implementation of KPC strategic trends. It made wide strides in its new projects and, it is bent on executing them during the year 2017/2018:
- FEED study contract for the polypropylene project was signed in Canada with Mr/s. Jacobs through Canada and Kuwait Petrochemical Company (CKPC). This is considered the most recent joint venture for the company in N. America and owned equally between it and The Canadian “Pembina” Company as the polypropylene project in Canada is the most important strategic projects of PIC outside Kuwait in a country with high economic competitiveness through which the Kuwaiti position can be internationally promoted in petrochemical industry. A PDH unit and the polypropylene plant at a production capacity reaching 550,000 tons annually will be built in addition to the main utilities, including central utilities unit to feed the project in the Canadian Province of Alberta at the cost of around US $ 4 billion.
- The project FEED, 80% of the supply phase and 20% of the construction phase of the project for building the petrochemical complex for producing ethylene glycol in USA at a production capacity of 750,000 tons annually were completed. The complex is executed via the joint venture Equate Company. Commissioning the plant is expected in mid-2019.
- The company began studying the economic and technical feasibility of the 4th Olefins project in Kuwait. The project aims at setting up a petrochemical complex to produce ethylene, polyethylene, ethylene glycol and specialized petrochemical products. Commissioning is planned to start in 2025.
- In line with KPC board resolution closing fertilizer plants and within KPC strategic trend options to depart from fertilizer activity besides the company’s executive management stressing to observe job rights of all employees at these plants and ensuring to employ them at the company’s future projects, the company is carrying out its strategic plan to close up the fertilizer plants. Production will stop on 31st May 2018 provided that final closure of plants be on 31st August 2018. Procedures of selling the fertilizer plant assets are expected to be completed by mid-2018.
- A plan for carrying out commissioning and maintenance works at the polypropylene and Paraxylene plants in Kuwait was completed. Getting the approvals necessary to execute the plan is in process.
In line with PIC strategy and in support of its clear future vision for expansion in the petrochemical activity outside the State of Kuwait, the company is in the process of studying some attractive investment opportunities that help enhance its international presence and increase its share in international markets in realization of its strategy to be a leading company in petrochemical industry.
Amid the expectations of continuous stability of the global petrochemical market on the long run and with the growing demand for petrochemical products, PIC is seeking to look for the best investment opportunities in targeted markets, e.g. the Asian market for realizing growth in petrochemical activity in such a way that realizes KPC strategic trends and keeps in line with the long-term strategy of the company.
PIC will endeavour to execute a number of petrochemical projects inside Kuwait to enhance its petrochemical competitive status and help push the Kuwaiti economy vehicle through creating new job opportunities.
Furthermore, investment in human resources remains an ever-sought goal out of our belief in the importance of developing the human element and creating an encouraging work environment as a fundamental base to support implementing the company strategy. In conclusion, I have the pleasure to extend on behalf of DCEOs, all employees and myself our greatest gratitude, thanks and consideration to HH the Amir, HH the Crown-Prince and HH the Prime Minister for their continuous support of the company. We also extend our thanks and appreciation to His Excellency the Oil Minister, KPC Chairman, KPC CEO all KPC and subsidiaries' officials and employees, all ministries, governmental and private authorities and institutions for their support and help of the company on all occasions, hoping this support will continue to realize what's good for the national industry in our dear beloved homeland.
Mohammed Abdulatif Al-Farhoud