Role of Refining in Kuwait Petroleum Corporation and its Impact on Indigenous People and Local Community

This report discusses the role of refining in Kuwait Petroleum Corporation (KPC) and its impact on the indigenous people and local community. It also examines the PESTLE factors affecting KPC's operations and success in the refining industry.

Oil and Gas Management
Kuwait Petroleum Corporation
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Contents
Introduction......................................................................................................................................2
Overview of company......................................................................................................................3
Role of refining in KPC (Kuwait Petroleum Company).................................................................3
KPC domestic refining................................................................................................................4
KPC Domestic upstream..............................................................................................................4
KPC International upstream........................................................................................................4
KPC refining operations..............................................................................................................5
PESTLE factors...............................................................................................................................6
Political factors............................................................................................................................6
Economic factors.........................................................................................................................8
Environmental factors..................................................................................................................8
KPC refining affects the lives of indigenous people and local community....................................9
Conclusion.....................................................................................................................................11
References......................................................................................................................................12

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Introduction
In the current era, the game-changing competition in the refining industry is drastically
increasing. The national oil companies are increasingly flexing their commercial muscles in the
refined oil products markets. In the coming few years, it is expected that there will be new
capacity start-ups in Kuwait, Oman, Saudi Arabia and in other areas of Middle Eastern and
Asian countries. This has been found that NOC gets affected due to the macroeconomic
influences the operations and success of the refining that involves in the NOCs. Thus, it is
essential for the government to plan so that they can reduce the adverse impact of the factors.
The report is based on the KPC (Kuwait Petroleum Corporation) which is one of the NOC that
perform the operations related to the refining. Being the government advisor of the Kuwait
Petroleum Corporation it is essential to talk about the role of refining within the organisation.
Along with this, detailed information of at least 3 factors that affect the refining of the country is
discussed. These factors are examined with the help of the PESTLE analysis framework which
includes the external factors impact on the company. In addition, the report includes the impact
on the lives of the indigenous people and the local community because of the refining activities
are undertaken by the company.

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Overview of the company
Kuwait Petroleum Company is well-known Kuwait’s national oil company with the head office
in the city of Kuwait. The major activities which are performed by the KPC include petroleum,
production, marketing, exploration, refining, petrochemicals and transportation of the products
(Kuwait Petroleum Corporation, 2018). The company is able to produce approx. 7% of the
world’s entire crude oil (Kuwait Petroleum Corporation, 2018). KPC came into existence in the
year 1980 on 27th January as an umbrella corporation participating KOC, KNPC, KOTC and PIC
successfully placing this company under the regulator of the government. In the market, KPC is
considered as one of the worlds most respected, reliable and trusted suppliers of the energy with
a long and proud history (Kuwait Petroleum Corporation, 2018).
Role of refining in KPC (Kuwait Petroleum Company)
Refining plays a vital role in the company who perform the operations of the refinery. The
refining process is majorly used by the company who produces oil from their factories. The oil
refining is one of the essential industrial plants that improve crude oil into petroleum products
like gasoline, diesel and heating oils (Kuwait Petroleum Corporation, 2010). The process of
refining is majorly served as the second stage in the process of a product in KPC. In the industry,
the course of refining process is normally known as the downstream second though on the other
hand raw crude oil manufacture is known as an upstream sector.
KPC make use of the both downstream and upstream for the local as well as for the international
sector also. The tenure downstream is lined with the notion that the oil is sent down the product
value chain to an oil refinery that is essential to be processed into petroleum. The stage of the

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downstream also comprises the actual sale of the products related to the petroleum majorly to the
businesses, governmental and to the other private individuals.
KPC domestic refining
KPC domestic downstream cultivate refining volume is up to 1.4 MM bpd in the average term.
This is considered as the maximum conversion capacity difficulty of KPC domestic factories
while accomplishing the local energy demand. The refining process plays a vital role for the
KPC with the help of which they can offer the petroleum products that can accomplish the needs
of domestic energy requirement and international market requirements in terms of quantity and
quality (Kuwait Petroleum Corporation, 2018).
KPC Domestic upstream
KPC domestic upstream include the capacity of the Kuwait 4.0 MM Bpd by 2020 for achieving
the sustainable crude oil production and maintain the same by the year 2030 (Kuwait Petroleum
Corporation, 2018). KPC pay for the created hydrocarbons by accumulation the proven reserve
through the enhancement of the retrieval of the hydrocarbons from the present tanks and pursue a
destructive onshore and offshore exploration program.
KPC International upstream
KPC Company also performs the operations related to the international upstream which include
the achievement related to the crude oil and gas production outside Kuwait of 200 MBOEPD by
the year 2020 which is essential to maintain throughout the year 2030 and reserves of 650
MMBOE by the year 2020 (Kuwait Petroleum Corporation, 2018). The international upstream
operation of company helps in maintaining the capability and technology of the business. KPC

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become the operations of international upstream assets by reaching more than 20% operatorship
by 2030.
KPC refining operations
KPC make use of the refining in their operations which helps them to produce the oil and
transport it to the different areas which reflect the role performed by refining in KPC. The
process of refining contributes in managing and operating the integration of the activities in the
most well-organized and specialized manner. In addition, the refining contributes in increasing
the shareholder value whilst confirming the best exploitation of the hydrocarbon funds of
Kuwait. Majorly, the KPC include the extraction of petroleum and its supply in the market. The
petroleum is able to be transported and distributed in the market once it gets refined properly.
The petroleum includes the mixture of the hydrocarbon compounds which include all gaseous,
liquid and solid states. In addition to this, the petroleum gets deposited into the sedimentary
rocks throughout the world. The role of refining in the KPC is to separate the petroleum into the
small parts and after this, it is essential to treat these parts industrially, valuable and into the
usable products that are produced. This is the fact that when the company distribute the
petroleum in the form of the crude then it offers the less value to the company as well as to the
customers.
Thus, this shows that the role of refining which is essential for the corporation to offer the quality
petroleum to the other companies in the market. In addition, it is essential to maintain their
operations in the international and domestic market.

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PESTLE factors
PESTLE analysis is the framework which is a tool which is used by the marketers to analyse and
monitor the macro-environmental factors that affect the organisation. The review of external
factors is essential to understand the impact on KPC.
Political factors
The political factors include the changes in the rules and regulations by the government that
affects the working of KPC in Kuwait. The major threats that affect the business of the oil and
gas company are the political factor because this can make changes in the decision taken by the
KPC (Baker, 2014).
Geopolitical conflict is one of the leading issues which affect the KPC operations. In the foreign
market, there are some countries that are not willing to form an effective relationship with
Kuwait. In addition, there are many reasons in the politics due to which the KPC doesn't form the
relationship and leads to conflicts (Doronin, 2013). The rise in the conflict affects the company
to supply the oil in the regions where the political conflicts have taken place. Moreover,
sometimes the member of NOC also faces numerous types of geopolitical factors which directly
create an impact on the decision making of the KPC. For example; Venezuela and Nigeria keep
the high prices for the different economic conditions which include their dependency on oil
exports revenues. On the other hand, Kuwait, Iran, UAE, Saudi Arabia and Qatar keep the low
prices of the products because they want to protect their market share in the oil market (Doronin,
2013).

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(Source: Pitatzis, 2016)
In addition, this has been found that government of Kuwait control more than 90% of the proven
oil reverses with the help of the NOC (National Oil companies) and 75% of the global oil and
gas production. This control of the government might affect the working of the KPC in Kuwait.

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In addition, the pressure of an appropriate amount of oil and gas reserves in the country can leads
to the civil wars with the rise in the corruption. This creates major side effects on the world as a
resource curse.
Economic factors
The economic factor is one of the major elements that affect the working of the KPC as these
factors include GDP, inflation rate, economic growth, purchasing power and many other
(Chernev, 2018). This has been found that there is a deep connection between the petroleum
industry and the economy of the country. Kuwait has small, wealthy and moderately open
economy which is approximately continuous since the growth of the gulf war. The major basis of
the salary in Kuwait is the crude oil that is approx. 95% of the country export and salary of
government. The importers of the country are becoming China, South Korea and India who are
contributing to growth and rise in purchasing power of the country. This has been found that
approx. half of the GDP of Kuwait is composed of oil sector that is 55% and remaining is
composed of the non-oil sector. Thus, the analysis reflects that this is favourable for the
decisions of the KPC. This shows the leading issue related to the less diversification of the
economy of the country. In addition, another issue is that the economy of the country is totally
depended on the international trade instead of the local population. These will affect the decision
of the KPC as they have to conduct their operations in a manner to effectively utilize the
resources (Grant, 2016). In addition, Kuwait might face a reduction in the sources which affects
their supply of the oil in the market. This also affects the profitability of the KPC.
Environmental factors
The environmental factors include the impact of the operations on natural resources. The
government of Kuwait has the legal right to bring the changes in the national taxes for the oil and

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gas industry (David, 2011). The current environmental trends reflect the decrease in CO2
emissions, a decrease in the usage of fossil fuels across the energy mix and rise in the renewable
sources of energy. KPC operations are affecting the atmosphere for the proper management the
effective Air emission has been done with the help of the Gas Flaring reduction (Kuwait Oil
Company, 2015). This reflects that KPC meets their obligations by following the regulations
related to the environment and also to reduce the gas flaring environment. In addition to this, the
KPC consume the water and energy resources which lead to the rise in the stringent
environmental standards. The government make the constraint to the use at some extent which
makes the KPC rethink about the extraction, production and distribution method to get the
license for operating the huge operations (Schopp, 2018).
KPC refining affects the lives of indigenous people and local community
KPC affects the life of indigenous people and the local community in several ways which
include the use of the land. Seberuang sub-district area includes the permit for oil and gas
extraction can affect the survival of indigenous people. The refining of the oil leads to the
exploration of the land and the atmosphere (IPIECA, 2018). This reflects that exploration of the
forestry takes place and forest area is considered as their source for the clean water, food,
firewood, medicine and many others. This is the reason due to which bati village rejected the
expansion of the 1139 plans in the area (Outlooks On Biodiversity, 2011). This reflects that KPC
refining is affecting the livelihood of the local community and indigenous people by opening
new plants in the area of forestry. Along with this, KPC is contributing in not offering the respect
to the human rights.

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It is the high time due to which the KPC continue to defend the lands and forest to engage the
stakeholders at all levels to safeguard the private sector and the government to preserve the
habitats and protect their rights.

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Conclusion
In the end, it can be concluded that Kuwait Petroleum Corporation is one of the NOC who is
performing the operations related to the refining. The analysis reflects that refining plays a vital
role for KPC in the market of Kuwait. It includes the downstream and upstream for the
international and domestic purpose. In addition, the discussion related to the different external
factors has been done that can affect the working of the KPC. The major 3 factors that impact
include a political factor, economic factor and environmental factor. In addition, the discussion
related to the refining impact on the lives of local and indigenous people has been assessed
which reflects that KPC should think for the projects on which they are performing their
operations.

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References
Baker, M. J. (2014) Marketing strategy and management. London: Palgrave Macmillan.
Chernev, A. (2018) Strategic marketing management. Chicago:Cerebellum Press.
David, F.R. (2011) Strategic management: Concepts and cases. India: Pearson/Prentice Hall.
Doronin, D. (2013) Macro-level Market Analysis of Kuwait [Online]. Available from:
https://www.theseus.fi/bitstream/handle/10024/55142/Kuwait.pdf [Accessed on 6th November
2018]
Grant, R.M. (2016) Contemporary strategy analysis: Text and cases edition. New Jersey: John
Wiley & Sons.
IPIECA (2018) Community engagement and Indigenous Peoples [Online]. Available from:
http://www.ipieca.org/our-work/social/indigenous-peoples/ [Accessed on 6th November 2018]
Kuwait Oil Company (2015) Air Emissions Management in Kuwait Oil Company [Online].
Available from:
https://www.epa.gov/sites/production/files/2016-04/documents/tue4emissionmanagementinkoc.p
df [Accessed on 6th November 2018]
Kuwait Petroleum Corporation (2010) Kuwait Petroleum Corporation [Online]. Available from:
https://www.kpc.com.kw/press/KPCPublications/CorporateBrochure/KPCCorporteBroshure201
0.pdf [Accessed on 6th November 2018]
Kuwait Petroleum Corporation (2018) History [Online]. Available from:
https://www.kpc.com.kw/about/history [Accessed on 6th November 2018]

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Kuwait Petroleum Corporation (2018) Kuwait refineries [Online]. Available from:
https://www.kpc.com.kw/InformationCenter/Pages/Oil-Refineries.aspx [Accessed on 6th
November 2018]
Kuwait Petroleum Corporation (2018) Strategy [Online]. Available from:
https://www.kpc.com.kw/about/strategy [Accessed on 6th November 2018]
Outlooks On Biodiversity (2011) Indigenous Peoples’ and Local Communities’ Contributions to
the Implementation of the Strategic Plan for Biodiversity 2011-2020 [Online]. Available from:
https://www.cbd.int/gbo/gbo4/outlooks-review-en.pdf [Accessed on 6th November 2018]
Pitatzis, A. (2016) PEST Analysis for Global Oil and Gas Companies Operations [Online].
Available from: https://energyroutes.eu/2016/05/08/pest-analysis-for-global-oil-and-gas-
companies-operations/ [Accessed on 6th November 2018]
Schopp, A. A. (2018) Three major challenges for the oil and gas industry [Online]. Available
from: https://www.veolia.com/en/market/industry/oil-gas-industries-environmental-impact
[Accessed on 6th November 2018]