18 Ismail: Kuwait Petroleum International Complet-ed 50% of Environ-mental Studies China Refinery Project Mr. Hussein Ismail, KPI, Chairman and Managing Di-rector remarked that KPC

18

Olefins IINew Achievment for Petrochemical Industries Co.

14Fourth Refinery Project: Economic Turning Point

8

In This IssueQuarterly Magazine

Issue No. 46, October 2008

KPC MissionKuwait Petroleum Corporation (KPC), fully owned by the State of Kuwait, is one of the world’s major oil and gas companies. It is focused on petroleum exploration and production, refining, marketing, petrochemical production & 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, while ensuring the optimum exploitation of Kuwait’s hydrocarbon resources. KPC has an important role in contributing to the development of the Kuwaiti economy, developing a national workforce, maintaining superior commercial and technical expertise, and pro-actively managing the environmental, health, and safety aspects of KPC’s businesses.

The KPC World team would like to extend their appreciation to everyone who contributed editorial material, information, and photos for this magazine issue.

CorrespondenceP.O. Box: 26565, 13126 Safat, KuwaitFax: (965) 4994991Website: www.kpc.com.kwEmail: [email protected]

Talal Al-Khalid Al-SabahManaging Director, Govermental,Parliamentary, Public and Media Relations

Editor-in-Chief

Media Relations Dept.

Editorial Team

KAFCOContribution to Kuwait’s Aviation Industry

18JatrophaBest Source for Future Biodiesel Production

22KOC Increases its production capacity

26Master successful Journeys

36

KGOC Seeks to Reduce Associated Gas by 2011

10

Issue No. 46 October 2008

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I wish you all a happy and blessed Eid. Despite the efforts OPEC continues to make to fix the prices of crude oil, there remains many other factors that have direct impact on the dramatic rise and fall of oil prices including geopolitical factors of oil-exporting countries. For example, oil industry officials in Kuwait have noticed the instability of oil markets and the losses that the oil sector can suffer if oil prices collapse again, as they did in 1998. They have tried hard to develop alternative industries, although these alternatives are based also on petroleum products, which are booming currently—making it a great value-added achievement to Kuwait’s economy.

KPC approved the Fourth Refinery Project, which is considered to be one of the most important environmental and economic projects in Kuwait. KPC is looking forward to operating this project in the future. The project aims to provide low-sulphur fuel oil, which is needed to operate power plants while protecting the environment. The refinery will produce 225,000 barrels per day of low-sulphur fuel oil with only one percent sulphur emissions - significantly reducing pollutants.

KPC World’s latest issue to date focuses on a group of topics concerning Kuwait’s oil industry such as a report on the Olefins Project II, the oil export facilities development to raise oil production in Kuwait to four million barrels per day, and the modernization of the Kuwait Oil Tanker Company fleet.

Editorial

Talal Al-Khalid Al-SabahManaging Director, Govermental,Parliamentary, Public and Media Relations

Kuwait Oil Tankers Company intends to start the second phase of modernization of its fleet; this phase consist of 6 tankers, 4 out of 6 are giant oil tankers has ca--pacity of about 330,000 tons, and the other two tankers are for petroleum products to be com--pleted between 2011 and 2012, with total cost about US$ 900 million.Once entering the second phase of construction, Kuwait Oil Tanker Company will directly plan for the third phase which will consist of 9 tankers, in this day the company will realize its strategy to reach 28 new tankers

by 2015. The number of tankers will increase, as Kuwait intends to increase its capacity of produc--tion up to four million barrels per day.Shwould be noted that the first phase of the modernization of the fleet included 9 tankers as well as services boat that have been built in South Korea, Singapore, and in Bahrain. This phase ended by receiving the tanker "Sedra 2", which is a floating petrol station that provides ships with fuel; Since the Kuwait Oil Tankers Company has received "Sedra 2" in June, it provided 14 ships with heavy fuel and diesel.

"Sedra 2" has specifications that qualify it to win the title (the Tank--er of the Year). Also "Wataniya 4" won camels "National 4" which is similar to "Sedra 2" the title (the Tanker of the Year) in 2007.It is known that the cost of build--ing the tanker "Sedra 2" amounts to US$18 million and its life span is about 30 years, with capacity of 5,000 tons. This enough to pro--vide a giant oil tanker with fuel for two - three months of sailing. (Sedra 2) was designed to carry oth--er oil derivatives, indicating that it is up to 90 meters length, 19 meters width, and 8.2 meters depth, and it is shipped by 500 tons of fuel.

With Global StandardsFleet to be 28 New Tankers by 2015

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Increasing Kuwait's Exports of the Liquefied Petroleum Gas to ChinaThe Kuwait's exports of lique--fied petroleum gas to China has

"The volume of Kuwaiti invest--ments in the refinery and pet--rochemical complex the joint Kuwaiti–Chinese project in the South Guangdong Province, has risen between US$ 8-9 bil--lion, making it the largest Chi--nese- foreign commercial joint venture", Mr. Saad Al-Shuwaib KPC, CEO stated.Al-Shuwaib pointed out that the Chinese National Development and Reform (NDRC), which is the largest agency for economic planning in China has agreed on the huge project, adding that the two countries signed in 2005 an understanding memorandum for the construction of integrated complex as a joint venture pav--ing the way for KPC to partici--pate in the long-term develop--ment of the oil industry in the Chinese economy which is the fastest growing in the world.He added that the Kuwait Pe--troleum International Company (KPI), which is the investment arm of KPC in the area of refin--ing and marketing abroad, has established a joint venture with the Sinopec, the largest oil refin--ing company in China, point--ing out that the factory would be set up in Nansha the capital Guangzhou province.Al-Suwaib said that, "The refin--ery is supposed to be designed for refining Kuwaiti crude oil

100 percent presented by KPC, since the capacity of the refin--ery is around 15 million tons per year or 300,000 barrels per day, indicating that the capacity of the cracking plant using eth--ylene is around one million tons annually.Despite the Olympic Games in Beijing 2008 brought an atmos--phere of optimism on the future of the Chinese economy but the Al-Shuwaib said that the invest--ments of KPC in the Nansha project will not be affected by the economic situation, even if the Chinese economy has slight--ly gone down.

increased to 495.4% comparing to the last year to reach 134,000 tons ahead of UAE that was con--sidered to be the largest exporter of liquefied petroleum gas to China.Kuwait came in the seventh rank as a largest exporter of oil to China. Its exports in July 2008 reached 545,000 tons, which is 4% of China's imports of crude oil.Statistics by the General Admin--istration of Custom of China shows that Kuwait provided China with 62.2 million tons of oil during the first half of 2008. Total imports of China from January till June 2008 was 90.5 million tons of oil, with 11% in--creasing comparing to the previ--ous year.Notably, China is one of the largest countries that consume the liquefied petroleum gas after USA and Japan.

Costs May Rise to US$ 9 BillionSaad Al-Shuwaib:

KPC to Raise Investments in Chaina’s Refinery and Petrochemical Complex Projec

KUFPEC Begins Operation of 9 Gas Wells in Australia

By the end of 2008, Kuwait For--eign Petroleum and Exploration Co (KUFPEC) is preparing to develop 9 natural gas wells (in--stead of 6 wells) in cooperation with Apache, an international company. The size of reserve gas allocated and ready to sup--ply to markets begins with 2 tril--lion cubic feet: this development will break the 4 trillion cubic feet barrier when the new additional production quota begins opera--


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Hussein Ismail: Kuwait Petroleum

International Complet--ed 50% of Environ--

mental Studies China Refinery Project

Mr. Hussein Ismail, KPI, Chairman and Managing Di--rector remarked that KPC represented by KPI has com--pleted 50% of the environ--mental assessment process of the new refinery to be estab--lished in China in cooperation with the Republic of China. The study is expected to be finished by early next year. He pointed out that the concern of the environment has be--come a global trend, not only in China, where each country is committed to the environ--mental laws. He asserted that KPI is committed to these global laws and standards in all its investments in various

tion. Distribution of production profits and operating revenues was established in the contracts and agreements: 35% for KUF--PEC and 65% for the Apache Company in a total of 240,000 acres to produce liquefied gas (classified AA+) for global mar--kets. These increased revenue sources will pave the way for KUFPEC to seize two new fu--ture operation’s opportunities with the Apache Company in Australia’s gas markets. Other substantial investment informa--tion will soon be revealed in the Asian markets including the Phil--ippines and Indonesia.

countries. "We are commit--ted to construct the refinery of China according to the highest international stand--ards and environmental stand--ards." Ismail said. Regarding the possibility of increasing the production capacity of the refinery in the future, Ismail explained, "All investments of KPI are based on purely eco--nomic grounds, pointing out that if there is demand by the oil market as well as economic feasibility, then the KPI will increase the production ca--pacity of the refinery."

He added that the refinery will be fully supplied by Ku--waiti oil. Notably, KPC repre--sented by KPI has taken a step to build a refinery in China with capacity ranging from 250,000 to 300,000 barrels per day in the cooperation with Sinopec-China, which is one of the major oil compa--nies in China.

Kuwait and Philip--pines Sign Agreements on Oil, Gas and HealthIn the framework of strength--ening cooperation in the fields of economics, health, and tour--ism, the State of Kuwait and the Philippines have signed three cooperation agreements on oil, gas and health. For the Kuwaiti side the agreement (in the fields

of oil and gas) was signed by Mr. Mustafa Al-Shamali, Minis--ter of Finance, and (in the field of Health) the agreement was signed by Khaled Sulaiman Al-Jarallah, Undersecretary of the Ministry of Foreign Affairs.It is noteworthy that the signing of the three agreements came after the visit of His Highness Sheikh Nasser Mohammad Al-Sabah Prime Minister for the Philippines recently. Kuwait is the sixth trade partner of the Philippines.

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The Fourth Refinery Project is one of Kuwait’s most im--portant projects eagerly await--ed by the Kuwait Petroleum Corporation which matches its global strategy and a grow--ing demand for oil locally and globally. The Fourth Refinery is a national strategic environ--mental project. It aims to pro--vide fuel oil to power energy plants and, at the same time, to protect the environment. The refinery will produce 225,000 bpd of low sulphur fuel oil (around 1%), which leads to a significant reduc--tion of pollutants emitted by

power plants: it also improves Kuwait’s environmental situa--tion in addition to producing 340,000 bpd (approx) of high quality refined oil. Other as--pects of the project include an effective positive development of Kuwait’s economy as well as providing economic career opportunities for Kuwait’s young people.

Economic Requirements

Studies indicate that associated gas found in Kuwait is 1 billion cubic feet (approximately). This amount is fully exploited in the petroleum industry, in petrochemical projects, and in power plants as the need for free and associated gas is grow--ing faster than the current pro--duction capacity. According to extensive technical studies on Kuwait’s energy needs in the medium term (2006) conduct--ed by KPC (and updated peri--odically in coordination with the Ministry of Electricity and

Fourth Refinery Project: An Economic Turning Point

Different Types of Kuwaiti Crude Oil with Refining Capacity of

615,000 bpd


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Winner Group Scope of WorkGroup No.

JGC (Japan), and GS Engineering and Construction (Korea)

The major manufacturing units include crude oil distillation units, removing sulphur units, naphtha, kerosene, and diesel treatment units as well as saturated gas units

1

SK Engineering & Construction (Korea)

Supportive manufacturing units include hydrogen production units, and sulphur manufacturing & recovery units

2

Flor Ltd (UK)Facilities, services and infrastructure3

Dalim Industrial Company Ltd. (Korea)Reservoirs 4

Hyundai Engineering and Construction (Korea)Marine export facilities 5

Water), the amount of free and associated gas production is not sufficient to meet the needs of the Ministry of Electricity and Water. This information un--derlines the necessity of setting up the Fourth Refinery which will meet on-going medium term needs with the produc--tion of low-sulphur fuel that is environmentally-friendly.

Environmental Requirements

Yellow smoke pouring out of the chimneys of Kuwait’s power plants is a familiar sight: indeed smoke produced by burning fuel oil contains 4% sulphur that increases sulphur emissions. This is one of the main causes of environmen--tal pollution in the country and unfortunately this kind of smoke increases in the summer because of the increasing de--mand for crude oil as well as fuel oil to produce electricity for air conditioning, for exam--ple. This kind of pollution has

prompted the Environment Public Authority (EPA) to is--sue legal guidelines besides recommendations to imple--ment environmental projects that reduce pollution such as the Fourth Refinery Project that will produce sulphur with 1% rather than 4% emissions.

Advisory ServicesGiven the importance of the Project, Flor Company, one of the world’s most experi--enced engineering companies in building refineries has been selected to play an advisory role for the Fourth Refinery Project. In accordance with the contract, Flor will pro--vide advisory services, primary engineering design, manage--ment and supervision of the project: the project includes 5 contracts representing 5 major business groups: The follow--ing table shows the scope of work of each company and the winning company in each cat--egory.

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“KGOC (Kuwaiti Gulf Oil Company) has succeeded in firmly establishing itself in 5 years after its creation to un--dertake the management of the Kuwaiti side in the Di--vided Zone with Saudi Arabia in both land and sea. KGOC has moved ahead to maximize production in cooperation with Saudi Arabia represent--ed by ARAMCO and Chev--ron,” confirmed Mr. Badr Al-Khashti KGOC C&MD recently in his conservation with KPC World.

Mr. Badr Al-Khashti KGOC C&MD stated: “Despite dif--ferences in policies and sys--tems of work between the two countries, the company was able to build a basis of

trust and common under--standing between the com--pany and the partners. They were able to reach common strategies aimed at achieving agreed goals, on production rates, the development and exploitation of reservoirs, gas development and exploration, and increased employment figures for Kuwaiti employees up to 85%.

The company’s strategic plan, among other things, will contribute to saving about 35 million cubic feet in addition to the Kuwait's current pro--duction of gas of 80 million cubic feet.”

What are the latest devel--opments of the company?

In mid-March 2008, KGOC in cooperation with a spe--cialist consultant moved ahead with its plan adopted by KGOC Board of Direc--tors as well as KPC. Strate--gic goals were divided into three groups; (1) the first group covers the main of--fice of the company; (2) the second group covers Wafra Joint Operations; and (3) the third group covers Al-Khafji Joint Operations (KJO). The project aims to determine re--sponsibilities, the necessary resources and to develop so--lutions for any obstacles met as well as prepare a detailed schedule to implement the plan’s strategic objectives.

What about the most im--portant new discoveries in KGOC’s land and sea op--eration areas?

In general the company is working on several main ar--eas: to maintain and increase production levels either through exploration of new reserves, or to expand facili--

KGOC Seeks to Reduce Burning Associated Gas

Mr. Badr Al-Khashti, C&MD, KGOC

KGOC to Strengthen KPC Efforts Increase Oil & Gas Production

283,500 bpd is the Actual KGOC

Production and 77.6 Million Cubic Feet

Daily is the Total Gas Production


10

ties and build new ones. In the area of drilling and explo--ration, for example, KGOC is currently expanding into 2 types of drilling wells: ex--ploratory wells which are drilled to test a new untested geological structures so as to increase reserves and increase production rates.

In addition, KGOC is making seismic surveys in every area of operations whether on land or at sea in cooperation with our Saudi partner (represented by ARAMCO). The focus is to explore any additional hy--

drocarbon r e s ou r c e s where 2D and 3D seis--mic surveys have been completed in the sub--merged sea area. Col--lected data is analyzed

to simulate reservoirs that were surveyed. Once results are analyzed, the developmen--tal plan will be put forward for Al-Lulu (oil) and Al-Durra (gas) fields. The plan to de--velop Al-Khafji field will be finished by mid-2009 which will keep the level of targeted production at 300,000 bpd.

What are KGOC’s priori--ties during the current pe--riod? It is concerned with drilling, production and exploration operations in the divided zone.

KGOC works within its long-term strategic plan de--

veloped for 2005-2020. The plan indicates that its most important priorities is the optimum exploitation and reservation of hydrocarbon resources with the wider context of human resources development in addition to the expansion of appropriate technology for each area of operations.

Six Major Priorities

1. Production Rates

• Access to production ex--ceeds 300,000 barrels per day and maintains the level of production during the next 30 years.

• Control of increasing op--erational expenses to pro--duce oil.

2. Reservoirs Development

• Apply the best reservoirs management techniques to produce oil & gas effec--tively and efficiently.

KGOC Invests KD 994 Million During Next 5

Years

11


• Augmenting oil production by adding proven reserves through exploration, and through improving pro--duction of existing reser--voirs.

• Expanding the scope of steam injection of the Eo--cene reservoir following the success of the first experi--ment, and drilling 57 wells to increase production from the Carbonate layer in the Eocene reservoir.

• Developing Durra gas field and Lulu oil field after

completing a study of the results of the 2D and 3D geophysical surveys.

• Developing Hama and southern Fawares fields of the Wafra joint operations.

• Assessing and redeveloping Ratawi reservoir in south--ern Fawares field with 8 wells by the end of 2008.

3. Gas Exploitation and Development

• Being the pioneer in the production of natural gas in Kuwait.

• Intensifying exploration, development and produc--tion of non-associated gas (Durra field).

• Achieving optimal exploi--tation of associated gas access to 1% (burning) by 2011 instead of current 45%. This will help save about 35 million addition--al cubic feet for Kuwait's current production of gas, which amounts to about 80 million cubic feet.

4. Exploration

• Following up on plans of

land and sea exploration. (Completion of seismic survey of sea area).

• Exploring the capability of Burgan and Zubair Layers in the south-eastern part of the land area.

5. Environment

• Adopting international standards for health, safety and environment.

• Insuring the safety of cur--rent health, safety and en--vironment processes by modernizing existing fa--cilities.

6. Human Resources

• Increasing the number of Kuwaiti employees to 85%.

• Developing and training employees for maximum effectiveness and skill de--velopment.

What is the size of invest--ments allocated to develop KGOC’s performance dur--ing the next phase?

KGOC’s five-year-plan for investments ranges from 2008-2012: Investments are estimated at KD 994 million

including previous expendi--tures prior to 2008.

What is the size of the cur--rent production of the di--vided zone on land and sea? What is the size of produc--tion of oil and gas on each side?

According to the latest report from May 2008:

• KGOC’s total oil produc--tion is 283,500 barrels per day.

• KGOC’s total gas produc--tion is 77.6 million cubic feet per day.


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Quantities are divided into Land and Marine Produc--tion:

Land Area Production

Wafra Oil Production

Ratawi/Burgan (light): 90,200 barrels per day

Eocene (heavy): 40,300 barrels per day

Total: 130,500 barrels per day

Wafra Gas Production

Total: 34.6 million cubic feet per day

Marine Area Production

Oil Production

Khafji: 133,500 barrels per day

Hout: 19,500 barrels per day

Total: 153,000 barrels per day

Gas Production in Khafji

Total: 43 million cubic feet per day

What are the common fea--tures of the relationship linking the company with the Saudi side on land and

in sea areas? How do you evaluate this relationship?

Frankly speaking, joint re--lations with the Saudi side extends the fraternal and distinguished relationships between our two countries with its historical roots based on common interests between the two sides.

What are the proposed mechanisms to develop techniques and skills, and to raise KGOC efficiency?

KGOC has been intensify--ing its efforts to expand the

use of modern technologies in its work areas which aim to maintain production and enhance productivity as we move successfully from Phase 1 to Phase 2, and with en--couraging results which has led to the start of Phase 3 that would maximize the use of heavy oil from the region’s largest reservoirs.

As stated earlier, expansion of the 2D and 3D seismic sur--veys in the sea operations area in Khafji is a result of KGOC’s intensification and the Saudi side's combined efforts to ex--

pand techniques and working skills to raise production ef--ficiency.

Finally, what is your as--sessment of the company’s performance in its first five years?

KGOC manages Kuwait's share of hydrocarbon resourc--es in the divided zone both on land and in sea areas together with the Saudi partner rep--resented by ARAMCO Gulf Operation Company in the sea and Chevron-Saudi Ara--bia in the land. Despite the

differences of the two part--ners and their different goals and policies, our combined experiences can build com--mon understanding and con--tribute to establishing trust and cooperation between KGOC and its partners. We seek to reach common strat--egies to achieve agreed goals set by the KPC either on pro--duction rates, development of reservoirs, gas exploitation and development, explora--tion, environment protec--tion, and increased Kuwaiti employment figures.

13


After the great success of the EQUATE I project, the Supreme Oil Council de--cided to expand the petrochemical in--dustry as it secures additional value for Kuwait’s economy in different ways in addition to an increasing demand for these materials in the international marketplace. In essence, the private sector was given more opportunities to enter into this crucial industry. At the same time, the Petrochemical In--dustries Company (PIC) began con--structing the Olefins Complex II or EQUATE II project which includes the Aromatics project.

Importantly, Olefins and Aromat--ics have common scientific properties with carbon rings. These rings can be treated by heat and other agents to produce different kinds of gases that can be used in many industries.

Scientists tell us that Olefins are pro--duced by hydrocarbonic derivatives that accompany oil, and Olefins are divided into two different molecules, one is called Olefins and the second is called Aromatics: each molecule has its own different chemical com--pound. Olefins are usually called linear compounds because a ring of carbon forms linear rings whereas Aromatics have one benzene ring which has eight carbon elements that forming a ring. Thus, each derivative has its own dif--ferent products.

Regarding Olefins, there are products that develop in different phases includ--ing the heavy phase. The oil produc--tion phase produces gases such as eth--ylene, methane, ethane and propylene that been separated from crude oil in factories that belong to the Kuwait Na--tional Petroleum Company (KNPC).

Yousef Al-UtaikiDMD, Olefins

Success of EQUATE

Project Led Supreme

Oil Council to expand

Petrochemical Industry

Al-UtaikiOLEFINS II Turning Point in Kuwait’s Petrochemical Industry


1�

EQUATE Company who will run the project while the main units of the ethane and glycol ethylene proj--ect will be handed in the third quar--ter of 2008."

Right from the beginning, the Pet--rochemical Industries Company (PIC) and the American Company DOW Chemical together with Ku--wait’s private sector represented by Boubiyan and Al-Qurain Compa--nies decided to be integrated with the EQUATE I project for many reasons. For instance, the EQUATE project is integrated with Olefins project. The connection between the Aromatics project and styrene olefins factory in one common unit will be economical in terms of the final cost of the project. Lastly, EQUATE will run all factories un--der one management.

Ethylene and glycol ethylene is to scheduled to be produced in August 2008, whereas the Aromatics proj--ects is scheduled to be produced in the first quarter of 2009. Total cost of the project amounts to US$3 bil--lion. 30% of the cost of the project is to be distributed to all partners and 70% is to be financed by the banks.

EQUATE & Olefins Projects

integrated

Methane is used in power plants and fertilizer factories. Ethane is sent to Petrochemical Industries Company (PIC) where the other gases such as butane and propane are exported to Japan and the Far East.

"Petrochemicals have a promising future. The prices are very high which, in turn, indicates that the project itself will generate good rev--enue. Moreover, the role of the pri--vate sector in Kuwait will increase through contractors, service com--panies, and some local factories," remarked Yousef Hamad Al-Utaiki, DMD, Olefins about the economi--cal feasibility of Olefins II.

EQUATE I / Olefins IIOlefins II is considered to be the second major project as EQUATE was first established in the early 90s. It extracted ethylene out of the gas, then sent it to Kuwait’s power plants. Since that time, it also began to produce polyethylene.

The Olefins II project is similar to EQUATE I in important ways. Ole--fins II will treat a group of associ--ated gases to produce 850,000 tons of ethylene, which, in turn, will be used to produce glycol ethylene in a new factory with production ca--pacity amounting to 650,000 tons yearly. This new factory will be in--augurated soon for this purpose. In addition, the Olefins II project will produce styrene to produce benzene and ethylene for the polystyrene in--dustry, furthermore increasing the production capabilities of the poly--ethylene factory to 225,000 tons.

"80% of the Olefins II project has been completed,"Al-Utaiki began. In the first quarter of 2008, some systems and units were handed to

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"PIC has adopted a promising strat--egy in the petrochemical field by launching the two major projects. Olefins and Aromatics are consid--ered a turning point for PIC because this is the very first time that PIC has entered the Aromatics field," com--mented Ahmad Abdullah Al-Habib, PIC DMD Aromatics.

The productive capacity of the aromatics project is expected to be 2.672 million tons of naphtha, which is the same amount that the KNPC refineries produce annually, 822,000 tons of brazilin, 396,000 tons of ring benzene in addition to other products.

Economic studies of this project took into consideration all changes in the international market besides studying the importance of the proj--ect's products. Brazilin, for exam--ple, is used to produce PET which is used to produce plastic bottles, and polymer fibers, and other important products. Also it took into consid--

Ahmad Al-HabibDMD, Aromatics

Ahmad Al-Habib: “We considered every aspect of a changing

perspective on the international market.”

AROMATICS... ... Promising Project in KuwaitAl-Habib


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eration the importance of the prod--ucts of this project for the use of the ordinary person. Worth mentioning that, Near East's markets are con--sidered promising markets for such products.

81% of the Aromatics project has been completed including produc--tion lines and construction works, which were implemented according to international technology systems meeting the highest standards of safety and environment protection.

Last but not least, Olefins II will provide real career opportunities for Kuwaiti young people in order to train them to develop major future projects as this project is considered to be a cornerstone of Kuwait’s economy.

Petrochemical industry is booming

internationally. The prices of petrochemicals are considered as value-

added for Kuwait’s economy

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KAFCO, the Kuwait Avia--tion Fuelling Company, was launched on 1 July, 1963 and is owned by KNPC (Kuwait Na--tional Petroleum Company). KAFCO currently comprises an independent board of directors consisting of four directors. KAFCO is considered to be one of the leading regional com--panies providing outstanding aircraft fueling services to the airline industry. KAFCO excels at providing excellent technical capabilities, good quality fuel as well keeping abreast of the latest developments in security and safety procedures. With an increased demand for aviation fuel in the 21st century as air--craft engines and planes have evolved, aircraft themselves have become bigger and faster, and alongside this develop--ment, has come the need for greater amounts of clean fuel. Today’s ultramodern aircraft need to be refueled at airports more quickly, effectively, and safely.

The Sky is the Limit

KAFCO Contributes to Kuwait’s

Aviation Industry

KAFCO accomplishes more than 2563 hours

beyond its 1600 training hour target for 2007/2008


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Jassem Al-Qattan KAFCO Co--ordinator, Health, Safety & Environment remarked that KAFCO continues be commit--ted to following the latest tech--nology while using the latest designs. Al-Qattan added that the secret of success lies in pro--viding permanent maintenance and periodic upgraded training for the entire KAFCO team. He pointed out that KAFCO’s contribution to Kuwait’s avia--tion industry is immeasureable.

Tight Security Measures

KAFCO follows strict security procedures within the company:

• All visitors and vehicles enter KAFCO through main gate #1. Information is checked by security men who form part of the Oil Sector Ser--vice Company.

• Visitors receive a visitors card and enter KAFCO grounds accompanied by a security man to their destination.

• Automatic magnetic cards are used for people and ve--hicles.

• KAFCO has developed a se--curity system controlled by cameras covering the entire site.

• Onsite security inspections continue around the clock.

• Security men work in shifts 24/7.

• No unspecified materials en--ter KAFCO grounds unless special entry applications have been submitted and ma--terials have been checked.

KAFCO continues to follow special important safety guide--lines during aircraft fuelling:

KAFCO personnel wear special uniforms when refueling such as safety jackets, shoes and hel--mets; personnel are required to follow specific protocols in--cluding ‘pressing down’ the safety device during refuelling to avoid safety hazards that may occur.

Health, Safety & Environment

KAFCO continues to surpass many 2007/2008 targets in its Health, Safety & Environment Department. HSE has achieved 2563 training hours – far above the designated target of 1600 training hours for 2007/2008. Training and special awareness lectures highlight certain key issues including the importance of providing information on any accident that may happen, defensive driving inside the warehouse, monitoring alcohol blood levels of drivers in the company, stressing the impor--tance of safety equipment for

KAFCO follows special safety procedures

1�


personal protection, classifying dangerous work areas, office safety, safety principles, electri--cal safety and environmental principles.

KAFCO training programs in--clude movies on topics of safety every Wednesday for the entire KAFCO team. These informa--tive media events include issues on how to prevent back injuries and other topics including stat--ic electricity.

KAFCO has linked together its evaluation system on annual performance with safety perfor--mance. KAFCO has identified a number of heath, safety, and

environment objectives for each employee: successful annual evaluations depend on achiev--ing these linked objectives.

Fire DepartmentKAFCO’s Fire Department has accomplished many im--portant targets: it has devel--oped seven field training and evacuation events in coopera--tion with the Kuwait Interna--tional Fire-Fighting Centre; it has modernized its emergency plan in cooperation with KPC; it has tested its foam injection system for all fuel tanks; and it has developed new On the Job Training courses to increase the

participation awareeness of fire--fighters in daily programs at dif--ferent work locations. KAFCO has included different kinds of programs in its On the Job Training such as How to use and maintain fire extinguishers & respirators, Deal with assem--bly points, and Dangers of fire, flammable substances and dan--gerous materials.

QualityKAFCO’s Quality Department has updated its filters to meet new global technical develop--ments. From December 9-10, 2007, KAFCO’s Quality De--partment participated in the


20

KAFCO’s new warehouse project matches the new economic strategy of openness within the broader Open

Skies Civil Aviation policy

10th Meeting of the Directors of Operations held recently in Qa--tar especially for GCC aviation fuelling companies. KAFCO’s Quality Department participat--ed in delivering two papers con--cerning health, safety, environ--ment and issues of quality.

Maintenance ControlKAFCO’s Maintenance Con--trol Department has checked the following facilities as part of its periodic maintenance plan. KAFCO’s Maintenance Control Department checked KAFCO fuel tanks and pipe--lines, checked KAFCO facilities at Ahmadi and Shuaiba Refin--eries, KAFCO fuel tanks and digging nozzle locations in the airport, and checked all activi--ties related to KAFCO’s project of adding pipelines and nozzles to the Kuwait Internationl Air--port cargo area.

Aviation FuellingJassem Al-Qattan explained that road aviation fuelling is done

through KAFCO’s fuel tanks or through ground nozzles: importantly, KAFCO maintains a total of 108 nozzles to fuel planes within the Kuwait In--ternational Airport. During the fuelling process itself, KAFCO’s Operation's crew tries their best to avoid any leakage of fuel on the ground.

If an accident occurs, however, a rapid series of actions follow including informing officials quickly, using fire extinguish--ers, or even the hotline linked to the Fire Operations room which deals with such acci--dents. There is an emergency button located at each portal of the Kuwait International Air--port to stop fuelling in case of emergencies.

Training & Development

Al-Qattan stressed that KAF--CO is eager to implement new employee training programs which seek to develop skills and

abilities to keep pace with the latest practical developments in this field. KAFCO maintains a continuous training program for all KAFCO employees in its various departments.

New Headquarters & Warehouse

KAFCO is developing its new headquarters with the latest se--curity and safety levels to pro--vide a camera surveillance sys--tem that keeps pace with the latest international develop--ments. In conclusion, KAFCO is also developing a new fuel warehouse which is expected to be completed by the end of 2008. Al-Qattan said that “the project goes along with the general strategy of Kuwait regarding more international economic openness, liberaliza--tion of the national economy as well as Kuwait’s Civil Avia--tion plan to provide airline fa--cilities through its Open Skies Policy.”

21


There is no doubt that alternative energy research requires major finan--cial resources plus committed tech--nical research teams but the ques--tion remains whether is it possible to dispense with the petroleum-based oil as the world’s primary source of energy. Most researchers say that oil will remain the only primary source for the next 50 years.

Many countries have become in--volved in alternative energy research and Kuwait is no exception. Under the direction of KPC, Kuwait has begun to study the Jatropha plant as the first practical step in this pro--cess.

Mr. Abdul Aziz Al-Attar Co--ordinator of Research and Marketing Studies Depart--ment, and Office Manager, Houston has emphasized that the Jatropha plant is a kind of succulent, its name is derived originally from the Greek language (which means physical nutrition (iatrrros trophe). Central America is its original home although Jatropha has spread widely to tropical and subtropical areas including India and Af--rica, and also North America throughout the centuries.

Jatropha Oil at US$ 43 per barrel

Kuwait Follows Lead To Study Jatropha

Production

Mr. Abdul Aziz Al-AttarCoordinator of Research and Marketing Studies Dept. & Office Manager, Houston

The Jatropha plant is drought- resistant and resistant to pests. When its seeds are crushed and then processed, the resulting oil can be used in a standard diesel engine while its residue can be processed into biomass to power electricity plants. Despite its prevalence and use as an oil-and-reclamation plant, none of the existing Jatropha plants have been properly domesticated; as a result, the productivity of Jatro--pha is variable, and the long-term impact of its large-scale use on soil quality and the wider environment remains unknown.

Currently, the oil from the Jatropha curcas seeds is used in the Philip--

pines to make biodiesel fuel. In the Philipinnes, Jatro--pha oil is actively promot--ed by the authorities, and as well in India and other developing countries in--

cluding the African state of Mali Philippine Jatropha oil is also promoted as an easily grown biofuel crop in hun--

dreds of energy projects.

Estimates of Jatropha seed yield vary widely because of a

lack of research data on the ge--netic diversity of the crop, the

range of environments where it is


22

grown, and its perennial life cycle. Seed yields under cultivation can range from 1,500-2,000 kilograms per hectare corresponding to extract--able oil yields of 540-680 liters per hectare. But that’s not all: in the fall 2008, Air New Zealand plans to fuel one of the four engines of its 747 jumbo jets from Auckland with fuel refined from Jatropha seeds. This important three-hour test flight could be one of the more promising steps by the financially-strapped airline industry to find cheaper, more environmentally-friendly al--ternatives to fossil fuel.

Jatropha oil is also significantly cheaper than crude oil—it could cost an estimated US$ 43 per barrel compared to US$ 122.30 for a barrel of crude oil (according to closing prices of crude oil on June 4, 2008).

Can you comment on biofuels that deplete agricultural lands and affect current prices of various consumer goods?First, I'd like to focus on future problems or challenges that may face the world in terms of the amount of consumption that exceeds pro--duction which, in turn, has pushed industrialized consuming countries to look for other means of energy.

Biofuel appeared during the seventeenth and eighteenth centuries when many people used whale blubber to produce lighting oil until the discovery of petrol when kerosene replaced whale bubber for lighting. As oil uses evolved, its uses spread across many different fields. People now seek other energy sources for fear of future challenges; they have discovered and utilized re--newable sources such as solar and wind energy. Especially during the last three years, this trend has continued in its search for other sources in--cluding the Jatropha plant.

Recently scientists have discovered that Jatropha can also grow in arid areas without large amounts of water. Kuwait’s neighbor, Saudi Arabia, in--tends to irrigate the Jatropha plant with brackish water. Luxor Egypt has planted Jatropha in wide areas of the Egyptian desert. Significantly Jatro--pha plays an important role in preserving and protecting the environment from desertification and importantly Jatropha is inexpensive com--

The global community has witnessed serious efforts

to conduct on-going research on alternative

fuel energy sources

23


pared to other kinds of plants. One good feature about Jatropha is that it does not compete with food production such as corn for ethanol.

Are there other kinds of plants which are used for fuel?Yes. Most of these plants are competing food sources such as corn and coconut that are grown most noticeably in China and India. These com--peting sources will not replace oil but may help (around one percent or even less) in certain local areas to meet consumption requirements.

The reliance on corn for the extraction of fuel contributed greatly to the current food crisis. Could it be important to turn to Jatropha instead of corn?The United States is considered to be one of the countries that grows a substantial amount of corn. The USA needs gasoline extracted from corn but it does not need diesel fuel extracted from Jatropha. Generally speaking, countries with substantia demand for diesel are Asian and European countries.

Which source produces fuel faster?Corn is much faster than Jatropha. By compari--son Jatropha does not compete with food, can be grown in the desert, and can hopefully be successful if we adopt the use of seasonal rainfall and/or brackish water.

How did the idea of using Jatropha appear in Kuwait?Of course, our role is to examine short- and long-term challenges of oil production. During conference settings, we learned about alternative biofuel production and we discovered that Jat--ropha is the most promising biofuel in its field. As I mentioned earlier, biofuels will not replace oil but they may help. In my personal opinion, this kind of fuel will succeed only within a nar--row range.

We tried to contact KPC’s office in China to get samples of Jatropha and they were sent to Ku--wait. The cost of Jatrophs seeds is somewhere between 1-2 KD per kilogram. We tried to grow it but initially without any success: it coincided with our winter season but during the summer season,it grew rapidly.

Jatropha seeds yield 1500-2000 kg per hectare which produces

540-680 liters of oil

Did you grow Jatropha in your own house so that you could follow its growth? And what was the oil like that was extracted from it?Yes. I planted the Jatropha plant in my home. I noticed that this plant loves sun but that dust harms it considerably—its leaves become yellow with exposure to dust.

Oil is extracted from the Jatropha plant by crushing the seeds inside the fruit. According to our study so far, fuel oil extracted from it do not need to be treated, and can be used directly. The amount of biofuel extracted from one Jatropha plant is about 40 percent.

Did KPC plant a large number of Jatropha plants?KPC planted approximately 20 trees used for research purposes only - just to ascertain the ac--curacy of the information we received.

How long does the Jatropha plant need to produce its fruits?

The plant needs two years to mature as a full fruit. In the winter, the plant requires approxi--mately 20 days to appear once it is planted whereas in the summer it takes only 10 days to sprout through the soil.

With the proper environment free from dust, can we accelerate its growth?

Yes, if we provide the ideal situation including the ideal atmosphere, we can increase its effi--ciency but even in this situation production still needs two years.

What is the next step after finishing the study?

We have planted the Jatropha plant for research purposes and not for investment. As you know we are an oil company and such kinds of projects need agricultural experts. It is possible that in the future extensive research could take place in col--laboration with researchers from Kuwait Institute


2�

for Scientific Research (KISR) or from the Uni--versity of Kuwait because there is on-going en--couragement from leaders to research this field.

What is the total consumption of diesel fuel in Kuwait?300 thousand barrels per day which includes benzene, diesel and fuel.

Do you think that Kuwait could become a producer of this vital source of biofuel?Biofuel has not succeeded so far to be economi--cally viable with oil but, perhaps, in the future – after twenty or even fifty years, it may compete with oil.

Tell us more about the specific productive capacity of Jatropha?We need an area 5×4 km square to cultivate more than two million Jatropha trees with a produc--

Is Jatropha toxic? What is the life span of this plant? How high does it grow?Jatropha is non-toxic Jatropha seeds are cov--ered with skin which can be used either as fertilizer or as food for livestock. The plant can live for 50 years and grows to 2-3 meters which becomes a natural shelter for bird life.

What do international companies think about the Jatropha plant and is there advanced research concerning it?Undoubtedly high oil prices reinforce the search for other energy sources but once oil prices go down again the entire issue will be neglected as it was during the 70s and 80s—however, we must now continue to look to the future.

Which countries are most interested in studying this plant?According to my information, East Asia is most interested in this plant because of the rising demand for fuel in addition to China, India, the Philippines as well as European countries particularly the Mediterranean re--gion.

India has cultivated and marketed Jatropha seeds as well as holding conferences and conducting research studies on this subject. In Africa, Jatropha is grown on a person--al level. Closer to home, Saudi Arabia uses Jatropha for desertification and decorative purposes.

Air New Zealand plans to use Jatropha in 3-hour test flight from

Auckland Fall 2008

tive capability of approximately 20,000 barrels of diesel per year. This amount of land is con--sidered to be a large area but from a different perspective we can see that Jatropha prevents desertification. It has environmental benefits es--pecially if it is cultivated in our desert areas in northern Kuwait. In the final analysis, we should not always seek for profit and economic feasibil--ity; in some cases, there are strategic as well as environmental long term benefits but such proj--ects need governmental support to succeed.

Which Gulf country is taking the lead?Saudi Arabia is considered to be the leading country in this field. In fact it is preparing to enter into a joint venture through Al-Jazeera Company with the D1 Company to cultivate 500 hectares of land. Kuwait will be the second Gulf State to enter into this kind of cultivation. To reduce risk, the project should be undertaken with governmental support or through a joint venture with an international company that has extensive experience in this field.

2�


KPC completes ambitious project to develop

Final stage of oil export facilities by end of 2008

Eng. Mohsen Jaser Al-ShimmariKOC Team Leader

Phase 1 and 2 increased storage

capacity by 3.4 mpd and export capacity

by 1 mpd

As part of its 2020 Strategy, KOC is pushing ahead to pro--duce 4 mpd of oil in 3 stages: Phase 1 is to produce 3 mpd by the end of 2010; Phase 2 to produce 3.5 million barrels by the end of 2010; and Phase 3 and 4 to produce 4 mpd barrels by the end of 2020. KOc has taken practical steps to develop its own facilities to increase production export capacities together with devel--oping its exporting facilities, which include:

• Establishing 19 giant reser--voirs in the northern and southern oil hanger;

• Laying five 48-inch diam--eter gravity pipes from the northern hangar to the new northern pier;

• Supplying and installing three new pumps in the new northern pier;

• Laying four sea oil pipes of 56-inch diameter: three of them extend from the northern pier to the new as well as current capstan berths, which range from 16-18 kilometers in length at sea, and the fourth pipe from Mina Ahmadi to the current capstan berth no. 20; and also laying another new 24-inch diameter pipe from Mina Ahmadi to cap--stan berths no. 23 and 24 for delivery of heavy fuel;

• Supplying and installing three stations to measure quantities of exported oil: each pipe is a separate en--tity enabling KOC to op--erate and export oil from the four capstan berths all simultaneously;

• Supplying and installing two new capstan berths no. 23 and 24;

• Modifying, where neces--sary, the two existing cap--stan berths to increase their export capacity;

• Supplying and installing two pumps and two units to measure heavy fuel at Mina Ahmadi;


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Production capacity to increase to 3 mpd

by the end of the Project

Eng. Ali Al-JazzafKOC Chief Engineer, Projects

• Supplying and installing machines in each tank to automatically dispose of excess water;

• Supplying and installing alarm control devices for gas and fire;

• Measuring devices equipped with special radar for all KOC reservoirs (new and old) in the northern and southern oil hangars; and

• Supplying and installing dif--ferent technical work.

On the project’s practical steps, Mohsen Jaser Al-Shim--mari, KOC Team Leader, com--mented, “Implementation of the project started with the Hyundai Company for Heavy Industries (South Korea) in October 2005 with a total cost of KD 361,599,477. By the end of 2010, the project aims to provide the necessary support to increase KOC pro--duction and export capacities to 3 million barrels per day.”

pacity and, at the same time, so it can provide the neces--sary flexibility to KOC's op--erations.”

In fact KOC received and operated Phase 1, which in--cluded the five reservoirs in the northern hangar - with two gravity pipes to transport crude oil from this hangar to the northern pier, and then from the pier to the new cap--stan berth no. 23 through the new sea pipelines. This pro--cess increased KOC’s storage capacity by 3.4 million barrels and export capacity by 0.32 million barrels a day.

Phase 2 includes two gravity pipes to transport crude oil from the northern hangar to the north pier, and to operate the second new capstan berth no. 24 through the second sea pipeline together with the operation of the pumps for each capstan berth 23 and 24. This process increases export capacity by 1 million barrels per day.

Al-Simmari continued: “Be--cause of the sheer size of the project and to maximize the time available, the project has been divided into four stag--es: as soon as the contractor hands over a finished part to KOC so it can maximize what has been achieved by increas--ing its storage and export ca--

2�


Phase 3 includes the operation of the gravity pipe from the northern hangar to the north--ern pier plus operating seven reservoirs - four of them are in the southern hangar and three in northern hangar, which in--creases KOC’s storage capacity by 4.3 million barrels. The op--eration of the current capstan berth no. 20 (after making nec--essary adjustments to increase productive capacity through the new sea pipeline) also in--cludes operating and pumping heavy fuel to the two new cap--stan berths.

“Phase 4 includes the operation of seven reservoirs in the north--ern hangar,” concluded Mohsen

Jaser Al-Shimmari, KOC Team Leader, “that increases KOC’s storage capacity by 3.4 million barrels as well as the operation of the current capstan berth no. 21 by the new sea pipeline to make the necessary adjustments to increase export capacity.”

Concerning implementation of Phase 3 and 4 of the Project to develop the export facilities, Mr. Ali Al-Jazzaf, KOC Chief Engineer, Projects, said that these phases are moving ahead according to schedule, with a slight delay because of lack of employees and technical factors but otherwise the whole project is expected to be completed and in operation at the beginning of

the next fiscal year. Al-Jazzaf commented on issues of safety and preserving the environ--ment. “KOC conducted many studies on risk management, he said, “including operational risk study (HAZOP), the study of health, safety and the environ--ment requirements (PHSER), quantitative risk assessment (SIL), and a study to determine safety levels (QRA).

The Project won EPA approval at every stage.”

20 May, 2008—the official opening of Phase 1 and 2—is considered an historic moment for the Kuwait Oil Company and the State of Kuwait.


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Outlined below is the OPEC Ministers of Oil-Exporting Countries ‘hot file’ related to the balance of the oil market prices during the last OPEC meeting:• OPEC oil supplies has led

to raising oil reserves of some countries: essentially a situation such as this warns of price break downs.

It is expected that certain oil reserves from some countries will increase in the fourth quarter of 2008 and in the first quarter of 2009. OPEC continues to produce oil intensively to ensure sufficient supplies of oil for world markets. It has been agreed that these particular countries will consume oil from current reserves instead of access--ing other reserves (as in previous years which led to a notable reduction of oil prices).

Increased oil prices led in--dustrial countries to reduce oil demand and to reduce oil expectations for 2009. It is necessary to create an atmosphere that encourag--es global demand for oil es--pecially after demands have fallen because of increased oil prices.

• Ensure enough supplies to face high demand during the winter months ahead.

In view of demands, OPEC decided to return to its Sep--tember 2007 production out--

put following the Doha Sum--mit decisions. The September 2007 production figures equal 28.8 mbpd compared to cur--rent production figures which remain at 29.3 mbpd—with--out counting Iraq’s and Indo--nesia’s production levels after they withdrew from OPEC.OPEC called on its current members to maintain produc--tion levels to limit the decline of crude oil prices: it indicated that OPEC's policy is to find a balanced market price while providing intyernational mar--kets with its current require--ments.On reviewing August 2008 production rates, some coun--tries have raised their produc--tion levels including Saudi Arabia, which raised its pro--duction figures to 9.5 mbpd instead of current production levels of 8.9 mbpd (in addition to Kuwait, Iran and UAE). Counting production rates of countries (who do not pro--duce 8.9 mbbp) in addition to production rates of these other previous countries, the total amount of oil will be 520,000 barrels per day. UAE

will reduce its production rate between 150,000-200,000 mbpd for 40 days during Oc--tober and November 2008 for maintenance reasons at Lower Zakum and Um Shif fields which will be partially closed. Lower Zakum fields pro--duce 280,000 bpd and Um Shif fields produce around 200,000 bpd. (Hurricane Ike and its impact on oil produc--tion and refineries hiked cur--rent oil prices).To ensure world energy sup--plies following OPEC’s plans, Saudi Arabia announced its intention to raise its crude oil capacity to the maximum: by 2009, Saudi Arabia plans to add approximately 3 mbpd to current production capacities and can produce 12 million barrels per day. 3 million ex--tra barrels per day is approxi--mately 20% of current produc--tion capacity. If world market demands remain stable during the next few months, oil prices will fluctuate reasonably in the international oil markets.

Mr. Mohammad Al-ShattiKPC Coordination and Follow-Up Manager, CEO Office

OPEC’s Flexibility with Market’s New Conditions

2�


Q8 Aviation expands its reachWorld’s sixth largest jet fuel marketer

By the end of 1990s, Q8 Aviation was faced with the challenge to address some fundamental decisions about its future. Could it continue as a respected jet fuel marketer on a regional basis, reliant on competitor refinery supplies, or was there a need to transform itself into a self-reliant integrated supply/marketer?

How it answered this crucial question is the heart of this story. The answer came about by close analysis of its competitive environment. In particular, one critical element identified a shift in supply/demand balances that left future European as well as Far East and Australasian markets importing jet fuel to satisfy increasing demand.

This scenario brought threat and opportunity to Q8 Aviation. On the one hand, Q8 Aviation realized that, in terms of threat, they could no longer rely on sourcing requirements from local refiners and would be eventually squeezed out of traditional markets through lack of competitive supply. The opportunity arose, however, because shifting import

dependence in key European markets could change the competitive landscape and the challenge was to put a strategy in place which would maximize this opportunity.

The adopted strategy was based on a simple set of criteria:

• Develop sufficient import capability by using large cargo vessels (65,000 tonnes) with enough storage to take such cargo sizes;

• Connect storage to cost-effective and robust logistics systems; and

• Build scale quickly by working closely with major airlines to capture overall economies of scale.

The theory was easier to create than to implement. The journey began by identifying possibilities to open jet fuel capabilities at the Port of Avonmouth in west England, connecting Avonmouth to redundant military storage, which lay inland; and linking this storage to a pipeline system that fed major UK airports in the southeast of England.

Project DominoWhat began as a simple idea, that is Project Domino, turned into a major engineering exercise developing a new port dedicated to large vessel capabilities. It also included regenerating 2 sizeable storage facilities, which had been unused for decades, and connecting them to the port with a newly installed pipeline together with an upgraded existing pipeline (50 kms) that would feed Heathrow Airport and Stansted.

Three years later the first vessel discharged its jet fuel cargo: this heralded Q8 Aviation’s transformation from a minor to a major player in the UK servicing major UK airports but also extending its marketing activities to numerous regional airports.

While Project Domino was in progress, Q8 Aviation looked further afield towards continental Europe for similar opportunities: France was the next target as northern France was becoming import dependent, too. Project Force, a joint venture with Air France, was established whereby Q8 Aviation secured future storage at Le Havre developing the requisite logistics to efficiently deliver jet fuel to Paris Charles de Gaulle airport, a market Q8 Aviation had not been able to service—until now.

Last but not target came the Port of Rotterdam, which opened up the large German jet


30

fuel market and underpinned Q8 Aviation’s presence at Amsterdam’s Schipol Airport. Negotiations with Vopak, the global storage operator, encouraged the development of the first independent jet fuel import tankage in Rotterdam itself. In parallel, a strategic alliance was formed with Lufthansa in Project Duo to begin import of jet fuel into the Rotterdam storage then further transportation by pipeline and barge to Frankfurt Airport.

The exciting combination of these three projects in these three important locations propelled Q8 Aviation from a modest jet fuel marketer in Europe to the largest importer of jet fuel in northwest Europe with 4 million tonnes annual volume. From November 2008, KPC will account for approximately one-third of this supply from Kuwait’s refineries.

Q8 Aviation now turned its market opportunities south to Sydney Australia in pursuit of shifting supply and demand. Together with Vopak, adjacent to Sydney airport, Q8 Aviation

secured the use of Qantas Airline tankage facilities.

Q8 Aviation’s latest developme-nts of supply/logistic platforms took place in Port Koper Slovenia. After lengthy negoti-ations lasting three years, Q8 Aviation secured exclusive rights to import jet fuel through its port in newly completed tanks which strengthened Q8 Aviation’s jet fuel supply to the growing markets of south, central and eastern Europe.

This Project Gateway joint venture with the port witnessed the first cargo arrival into the port in May 2008 to transport jet fuel by road and rail to major regional airports such as Vienna

to the northeast, and Venice to the west. This facility could well become one of the key import locations in the Mediterranean via the Port of Koper extending into southern Germany, the Adriatic countries as well as Hungary, Slovakia and the Czech Republic.

A number of other similarly exciting projects are underway: they include the development of a major import facility at Zhuhai in southern China, which will serve Q8 Aviation’s substantial business in Hong Kong airport as well as large growing markets in southern China. Zhuhai will receive its first cargo in January, 2009.

31


A complete understanding of the environmental impact from the oil & gas industry is of prime impor--tance to its policy makers. Over the last decade, the State of Kuwait has passed substantial legislation about environmental protection and its strict enforcement. The oil & gas industry operations mainly comprise exploration, development, produc--tion of crude oil and its refining involving various operations includ--ing drilling, processing, and trans--port and refining. At each stage of oil industry activity, long term envi--ronmental impact continues due to emissions either as liquids, solids, gases or noises. One major impact is soil contamination from acciden--tal oil spills and operational leaks at various stages of oil exploration, production, storage, and transpor--tation. Bioremediation has become

a very successful cost-effective pro--cess: it is one of the methods rec--ommended in KPC’s Environment Management System, Document No 13 (Management of Waste: Minimization and Disposal).

Part 1: Bioremediation ProcessBioremediation is a procedure for removing toxic or biohazard contaminants that are a threat to human health or to the environ--ment. Bioremediation is a process that uses naturally-occurring mi--cro-organisms such as yeast, fungi, or bacteria to break down or de--grade hazardous substances into less toxic, or even nontoxic sub--stances. Certain micro-organisms can even digest organic substances such as fuels or solvents that are

Restoring Contaminated Soil through

Bioremediation

Accidental Oil Spills Impact Soil &

Ground-water

by Dr. Fatima Al-Shatti

Environment Dept.


32

hazardous to human health. These micro-organisms break down or--ganic contaminants into harmless products—mainly carbon dioxide and water. Once contaminants are broken down, the micro-organism population itself is reduced be--cause the micro-organism popula--tion has depleted their own entire food source. Dead micro-organ--isms or small populations (in the absence of food) ultimately pose no contamination risk. Simply put: bioremediation is a ‘clean-up’ dis--infecting process designed to re--move contamination from the soil, groundwater, or other medium.

‘Cleanup’ Process: One of Three CategoriesRemoval: Harmful chemicals are removed from contaminated air, soil, or water.

Treatment: Contamination is treat--ed: changing harmful chemicals into less harmful. This treatment can be done in the ground (in situ & ex situ bioremediation), or out of the ground when contaminated soil or groundwater is removed, cleaned, then put back into the area where it came from.

Containment: Harmful chemicals are left in the ground but steps are taken to prevent these chemicals from being absorbed into clean air, soil, or water. These chemicals are prevented from coming into con--tact with people.

How it worksFor bioremediation to be success--ful, micro-organisms must be ac--tive and healthy. The technologies of bioremediation assist micro-or--ganisms to grow: they also increase microbial populations by creating optimum environmental conditions for them to detoxify the maximum amount of contaminants. The specif--ic bioremediation technology is de--termined by several factors: for in--stance, the type of micro-organisms present, the site conditions, and the quantity and toxicity of contami--nant chemicals are all important. Different micro-organisms degrade different types of compounds and survive under different conditions. Bioremediation can take place un--der aerobic and anaerobic condi--tions. In aerobic conditions, micro-organisms use available atmospheric oxygen to function.

Certain Micro-

Organisms can Digest

Organic Substances

such as Fuels or Solvents

Hazardous to Human

Health

33


Bioremediation applications:

In-Situ or Ex-SituIn-Situ: Treats contaminated soil or groundwater where it is found. Techniques such as these do not need to excavate contaminated soil, so it is less expensive, creates less dust and the release of less contami--nants. It is possible to treat a large amount of soil all at once. But the technique has its drawbacks: it is very slow as the goal of aerobic InrSitu is to supply oxygen and nutri--ents to the soil’s micro-organisms. This InrSitu technique varies in the way it supplies oxygen to organisms that break down contaminants. Two methods are related:

1. Bioventing is a system which de--livers air from the atmosphere into the soil (above the water table) through injection wells placed in the ground where the contami--nation lies. An air blower can be used to push or pull air into the soil through these wells. Nutrients such as nitrogen and phosphorous can be pumped into the soil to in--crease the growth rate of micro-organisms.

2. Injecting Hydrogen Peroxide which delivers oxygen to stim--ulate the activity of naturally- occurring micro-organisms. The injection process circulates hy--drogen peroxide through con--taminated soils to begin the bioremediation of organic con--taminants. This technique is only used where the groundwater is already contaminated.

Ex-Situ: Treats contaminated soil after it is excavated from the site sometimes before and after biore--mediation as well as during solid-phase bioremediation.

1. Solid-Phase Bioremediation

Requires a great amount of space and the cleanup takes longer to complete. Moisture, heat, nutri--ents, or oxygen are controlled to enhance the bioremediation pro--cess.

2. Slurry-Phase Bioremediation

Contaminated soil is combined with water and other additives in a bioreactor (large tank used

Circulating Hydrogen Peroxide through

Contami-nated Soils

assists Bioreme-diation of Organic Contami-

nants


3�

for mixing) which is particularly useful where rapid remediation is a high priority.

3. Solid-Phase Bioremediation

Treats soil in above-ground treatment areas. Moisture, heat, nutrients, or oxygen are con--trolled to enhance the solid-phase system which needs a large amount of space. The cleanup requires more time to complete than the slurry-phase. This phase includes:

a. Land farming: It is a simple method where excavation takes place; the soil is periodically turned over to mix air into the waste itself;

b. Soil bio-piles: Bio-piles of con--taminated soil (several meters high) are moved over an air distribution system: easily pulls VOC through the soil; and

c. Composting: Mixes waste with straw, hay or corncobs; placed in a treatment vessel to be mixed and aerated.

Will it work for every site?Bioremediation is useful for many types of organic wastes and is a cost-effective, natural process. Bioreme--diation can be conducted on-site eliminating the need to transport haz--ardous materials for treatment. The effectiveness of bioremediation is lim--ited at sites with high concentrations of metals, highly-chlorinated organic or inorganic salts as these compounds are toxic to micro-organisms.

In Part 2, we will discuss how KPC subsidiaries have implemented KPC HSEMS Document No. 13 (Man--agement of Waste Minimization and Disposal) to handle oily waste through the process of bioremedia--tion.

Bioreme-diation

includes In-Situ and

Ex-Situ

3�


fore several and different parties ranging from charterers to port officials to terminal representa--tives, government authorities, to classification societies repre--sentatives, surveyors and many more. In essence, Master's role put much onus on him for keep--ing the ship in a safe, seaworthy, operational, accident free con--dition.An example on responsibilities facing the Master is ship deten--tion and prosecutions that might follow. If the ship is in a UK wa--ters, for instance, and the Port State Inspector (an empowered authority) has arrived at some

findings of magnitudes that he believes immediate cor--rective actions are required,

then under the Merchant Shipping act, the inspec--tor is empowered to detain the ship un--til the observations are rectified. If the Master refuses a detention order

In this article I will attempt to take the reader to a journey that is unique in nature, it will cer--tainly not be anything like the real experience but neverthe--less it is hoped that it will shed some light on certain aspects of this very interesting and unique profession, the seafaring pro--fession. My brief subject is generally about life on board and specifically the Master's role. The instance the Mas--ter takes the command from his predecessor, he auto--matically becomes respon--sible for the seaworthiness of the ship; the good keep of the crew, the ship and the protection of the en--vironment. The Master is the owner’s representa--tive on board the ship and represents him be--

The Master bears the biggest

pressure in putting the mechanism that keeps the

vessel safe

by Captain Mas’ud AliManager Fleet Marine Operations(Kuwait Oil Tankers Company)


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JOURNEY in MasterProfession

he will be liable on summary conviction to a maximum fine of 50,000 or conviction on an in--dictment, an unlimited fine. Of course this stems from the fact that all vessels whether owned privately or commercially enter--ing waters of a coastal state place themselves within the jurisdic--tion of the coastal state. As such, the Master and his crew are sub--ject to the laws of the flag state and the laws of the port state. Moreover, the Master is, of late, liable to criminal prosecution in the event of an accident that re--sults in loss of life or damage to the environment.

and engineer contribute most in making difficult times look easy and successful.Master in command, knows his responsibilities and obliga--tions towards all stakehold--ers, he knows that there are so many protocols and regulations that need to be observed and adhered to at all time, failure which could lead to serious pu--nitive measures.These demanding obligations put a huge pressure on the Mas--ter when operating his ship. If we take a scenario where the ship is alongside, (Berthing operation is a detailed opera--tion which cannot be covered completely in this limited space) The vessel might be secured at a jetty or at an SBM (Single Buoy Mooring), the ship goes through ship/shore formalities for clearing the vessel from all the required protocols and gov--ernment officials would have had their papers signed and re--ceipt prior any cargo operation. As would be expected, safety is the number one issue. Ship/shore check list will take prece--dent before any activity. It is im--portant to ensure that ship lines and mooring lines are all taught and secured well. The access to the ship must be well prepared and secured properly. Illumi--

and other related stakeholders in a diligent manner.If the order is for the ship to load then preparations for the opera--tion would have been made in advance. As mentioned earlier, life on tankers is demanding, it is almost a regimental sort of envi--ronment. It is well possible that the Master has been navigating the ship safely for a lengthy pe--riod to the port of destination to realize that he is instructed to get ready for immediate berth--ing which itself another round of work load. Yes, a demanding and a difficult situation but a skilful organized Master under--stands well the concept of the team management and the im--portance of correct involvement of team members at all levels. Like any other business organi--zation, team work is the essence of healthy and successful ship--board life style, Master alone cannot orchestrate the whole operation alone, it is here were good quality competent officer

Life on tankers is almost a regimental kind of environment

The aforementioned example is just a quick glimpse of respon--sibilities and risks the Master is subject to when taking com--mand.Because of the dynamic nature of the business the ship is nev--er at rest, for this article, the ship referred to is a Very Large Crude Carrier Tanker or VLCC for short. When a voyage order is received the Master reads and review the contents very care--fully making notes on the quan--tity of cargo to load, limitations if any, he will check draft restric--tions along with bunkers (fuel) required to lift whether from a barge or at the terminal. The Master will carefully read char--terer's requirement with regard to the loading/discharging pa--rameters, together with the re--quired voyage documentation that need to be pursued. The Master's ultimate objective is to ensure complete discharge of his obligation towards the charterer

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Cargo documentations is a very delicate and important phase where the Master must ensure that all figures in the Bill of lad--ing is as accurate as possible. The Bill of Lading is such important document where it represents the receipt of the cargo, the contract of carriage, it is a docu--ment of title and it represents the goods carried. The posses--sion of this very important doc--ument means possession of the cargo, thus the Master is indeed very careful in handling this re--ceipt.When all done and the nomi--nated cargo is loaded on board (for VLCC quantities range from 260,000 to 310,000 tons DWT), Bridge (navigation steer--ing room) navigational equip--ment would have been checked for performance, some of the equipments and the instrumen--tations are checked against the engine room to ensure synchro--nization.The ship sails, as with berthing the un-berthing is again a deli--cate operation, stations would be posted all around to ensure good control at all times.The ship is a floating asset that is prone and subject to weather changes, operations could well suspend if the weather deterio--

rate and ship, if secured along--side, could be instructed by the port authorities to vacate berth and anchor at a safe haven.The weather is indeed a deter--mining factor, when the ship's course is laid out for the next voyage; much interpretation is taken into account allowing for the weather effect. Information on board would be collected form references such as ship routing guidelines.The passage plan would have been prepared taking into ac--count the information required including; establishing a meth--od of navigation which can be used continuously, position fix--ing of the vessel at regular in--tervals, understanding charac--teristics and manoeuvrability of own ship specially loaded/bal--last conditions, emergency pro--cedures and much more details that laid out just to ensure that the voyage is safe at all stages.The voyage duration deter--mines other daily activities such as deck fabric maintenance, rou--tine inspection of machineries and compartments, inspection of stores and working areas es--pecially in the machinery space making sure that cleanliness of the engine room is maintained at all times, regular inspection of cargo containment system, gadgetry and associated system, inspection of working equip--ment and Life saving equipment along with other emergency equipment and fire fighting sys--tem and many more.Thankfully with technological advancement, the life on board is not in isolation from the ex--ternal world, considering the ease of communication when the vessel transiting near or in a coverage areas, add to that, ships nowadays equipped with variety of entertainments and

nations must be adequately set for night time operations, signs and posts must all be rigged for shore visitors in compliance with ship security measures especially with the existence of the ISPS code (International Ship and Port Facility Security code).When the safety rounds are done and shore official have cleared the vessel for operation then comes the agreement between the ship and the shore to start the cargo operation. If loading, figures would have been agreed upon and both systems on board and at the shore side are lined up to commence when thumbs are up. Good communication is a key factor in performing the job efficiently and effectively.Prior completion of the loading, the Master would have notified in advance all parties concerned of the expected departure time and preparations for sailing.


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modernized living accommoda--tion that helps in making life on board more acceptable.

Going back to our voyage, the Master would continue on daily basis updating positions to par--ties concerned, giving them best estimated time arrival at the dis--charge port or ports.

At the discharge port the Master submits arrival message to the agent, receiver port officials etc. Just like the arrival, the Master gives information on the voyage details and vessel's particular in--cluding any other information requested by the receivers.

With ever increasing mandates and legislations governing ship’s operations, the burden and re--sponsibility on the Captain are growing arduous and time con--suming. To maintain the good keep of this key business it is important to create incentives in order to boost morale and mo--tivate future generations to join this demanding but important career.Incoming reports indicate that with ever increasing legislations in the industry, which from looks of it is growing and on the increase, seafarer's profession is becoming more challenging and arduously demanding. The call for adoption of best practice has been manifested in the OCIMF (Oil Companies International Marine Forum) publication known as TMSA (Tanker Man--agement Self Assessment) which in itself a declaration on the di--rection the industry is aiming at.For past years the seafaring busi--ness and the shipping industry were not recognized adequately, and as a result introduced a neg--ative image in the media. May be with the technological advance--ment the picture nowadays is somewhat better than is used to be, making this essential mode of transport more apparent and hopefully a starter for better rec--ognition and acknowledgment.

labor organization, and en--forcement of IMO and ILO conventions. The Master needs to understand and be conver--sant with Flag state regulations and provisions, statutory inves--tigations and inquiries, under--standing of ship registration, ship operational requirement which includes MARPOL and SOLAS (safety of life at Sea) regulations, understanding legislation relating to seafarers training, hours of work, man--ning, and certifications. Un--derstanding of the commercial aspect of ship operation which means meeting charterers re--quirement as stipulated in the charter party. Understanding marine insurance cover, such as hull and machinery policies, P&I cover cargo insurance, pollution liability conventions and schemes. Losses and cat--egories of losses, claims and general average. Salvage opera--tions and contractual aspects of salvage and many more.

With technological advancement, life

on board is not isolated from the

external worldThe vessel berths for the dis--charge operations, similar to the loading operation except that and in this case the operation is in reverse i.e. the vessel will pump cargo to the shore side. Safety checks, vessel clearance, ship/shore check list will all be performed as usual.The aim in this article is to shed some light on Master’s Responsibility and pattern of shipboard life style in a brief quick snap shot manner. How--ever, there are rules, regulations and legislations that the Master needs to acquaint himself with before taking or accepting command of a ship. Such rules and regulations include but not limited to; international maritime law, understanding of treaties and conferences governing the law of the sea, understanding of International

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